Hope springs eternal: financial adviser says to buy shares of home builders’ stocks

Financial services company Raymond James has upgraded some of the nation’s largest home builders to outperform from market perform, which essentially tells investors to buy shares of the company.

December 08, 2011
home builder, home building, housing market, stock market, shares

Financial services company Raymond James has upgraded some of the nation’s largest home builders –– Lennar, Toll Brothers and D.R. Horton –– to outperform from market perform, which essentially tells investors to buy shares of the company, the Wall Street Journal reported on its blog.

James says shares of home builders rise during the holidays in a phenomenon called the “hope trade.” Indeed, K. Hovnanian and Beazer have both shown recent increases in shares.

“Even though December and January are among the seasonally slowest months for new home sales — this window of time has proven to be a great time to own home-building equities in recent years,” analysts Buck Horne and Paul D. Puryear write in a client note. “Home-building equities have outperformed the S&P 500 each of the past seven years, by an average of 11 percentage points, between mid-November and the end of January.”

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