This homebuilder is growing at double-digit rates, but the stock price is at bargain levels.
D.R. Horton (DHI)
From Cabot Undervalued Stocks Advisor
D.R. Horton (DHI) is a homebuilder. The company just completed its 2016 fiscal year in September, with expectations of 19.0% EPS growth. Looking toward to fiscal 2017, EPS are expected to grow 13.0%. The corresponding P/E is 11.0. The stock is undervalued with a dividend yield of around 1%.
On September 27, Fitch Ratings upgraded Horton’s senior unsecured debt from BB+ to BBB-, on the heels of an August rating increase from Standard & Poor’s from BB to BB+. Horton’s bonds now qualify for inclusion in investment-grade bond indexes.
The recent price correction in DHI has created a buying opportunity. DHI seems to have exhibited a shakeout chart pattern in the last couple of days--a bullish sign that the next move is up. There’s upside resistance at 34.50, with room for traders to make over 10% on the rebound. Buy.
Crista Huff, Cabot Undervalued Stocks Advisor, www.cabot.net, 978-745-5532, October 11, 2016