James Altucher joins the contrarian call to buy the home builders as he sees new homes sales increasing but new home starts falling. The supply is going down but demand is going up, he says. Altucher is not thing only one buying the home builders, hedge fund manager David Tipper made a similar call. Which in one sense seems crazy right now, so perhaps it’s a wise move.
Mr. Altucher says the home builder stocks to buy are these:
I’d buy a basket of stocks in the industry, in particular the guys who have managed to post profits despite the horrible housing downturn. Because once these statistics get better, these home builders will begin to show massive profits: In addition to Toll Brothers (TOL), Lennar (LEN) , and DR Horton (DHI) , I’d also buy multifamily (apartment building) REITS such as Equity Residential (EQR), AvalonBay (AVB), and UDR, Inc. (UDR).
What about all of those foreclosures? What about the lack of jobs? He doesn’t see this as an immediate turn around of course. He’s sees the stocks going up in roughly six months….are you going to join him on this trade? To me, it does seem like a good call, especially if you could wait say five years, and buy one of those home builders with a dividend. That’s a long time though. A lot can happen between now and then. However, people will always need somewhere to live.
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