D.R. Horton: History Says Not To Chase This Rally

Oct. 01, 2024 3:04 PM ETD.R. Horton, Inc. (DHI) StockXHB
(7min)

Summary

  • D.R. Horton, Inc. stock surged in Q3 due to hopes of a housing sector revival from the Federal Funds rate cut, outperforming the SPDR® S&P Homebuilders ETF.
  • However, despite strong Q3 results, D.R. Horton trades at historically high price-to-book and price-to-sales ratios.
  • Homeowners locked into lower mortgage rates and low housing affordability limit new home demand, challenging the sustainability of D.R. Horton's stock rally.
  • An analysis around D.R. Horton after the stock rose by a third in the just concluded third quarter follows in the paragraphs below.
  • Looking for a helping hand in the market? Members of The Insiders Forum get exclusive ideas and guidance to navigate any climate. Learn More »

Two construction workers talk together inside large house under renovation

Jessie Casson

Today, we are putting a large home builder named D.R. Horton, Inc. (NYSE:DHI) in the spotlight. Like most home building stocks, this equity has gotten a huge recent lift from the hopes that the recent

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This article was written by

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We are a team of analysts led by Bret Jensen, Chief Investment Strategist at Simplified Asset Management.

We run the investing group The Insiders Forum where we specialize in small and mid-cap stocks that insiders are buying. The Insiders Forum portfolio managed by Bret Jensen consists of 12-25 top stocks in different sectors of the market that are attractively valued and have had some significant and recent insider purchases. Our goal is to outperform the Russell 2000 (the benchmark) over time.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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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