I recently wrote a bullish article on Pulte Homes (PHM) for Seeking Alpha. Many comments on that article wondered why I picked Pulte to write on rather than one of several other mentioned homebuilders. I
M/I Homes: Another Super-Cheap Homebuilder, Could Double From Here
Summary
- Demand for new housing should be strong for the foreseeable future, and competition is rational.
- M/I has a solid EPS outlook. I see $20 a share by 2025.
- M/I has transitioned from meager to abundant free cash flow. Lots of buybacks ahead.
- My valuation is silly-low. A 5 P/E on this year's earnings, and 3x my '25 forecast.
Gary Gordon’s career was on Wall Street, where he was a stock analyst covering the housing, mortgage and consumer finance industries. He also served as a U.S. investment strategist and as a portfolio manager. The bulk of his work career was at PaineWebber and UBS. He is now retired. Mr. Gordon is an adjunct professor at Mercy College in New York. He teaches economics on campus and math at prisons (Sing Sing and Taconic in New York). He also presents financial literacy seminars to adults and students. He is on the Board of Hudson Link (college education for incarcerated men and women) and the Baron de Hirsch Fund. Mr. Gordon is married with two young adult children. He has degrees from Colgate University (BA '74, philosophy) and The Wharton School (MBA '77, finance).
Analyst’s Disclosure:I/we have a beneficial long position in the shares of MHO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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