Sell: LGI Homes, Inc. (LGIH)
From Cabot Undervalued Stocks Advisor
Updated from WSBI 824, December 18, 2019
LGI Homes is the tenth largest residential home builder in America. The company is currently building homes, primarily for first-time home buyers, in 19 U.S. states from coast to coast and the District of Columbia.
LGI Homes joined our portfolios in early December. We caught three run-ups since then, with a buy recommendation at early points in the run-ups, then moving to Hold recommendations at the peaks. Along the way, the earnings outlook slowed enough that the company does not present enough potential earnings growth to remain in the Growth Portfolio.
Therefore, I’m selling LGIH today. The stock peaked at 95 in February, and it’s possible that it will retrace that price soon, but I encourage you to sell by that point. Homebuilders don’t generally thrive during economic recessions, so caution is warranted. Sell.
Crista Huff, Cabot Undervalued Stocks Advisor, cabotwealth.com, 978-745-5532, May 27, 2020