Home Depot, Walmart And a Key Inflation Measure (PMI) In Focus
And why our clients own LGI Homes
On Monday, markets will take a break in honor of Presidents Day, but investors will soon be busy again as corporate earnings and economic data pour in. Tuesday sees results from LGI Homes, Home Depot, Walmart, and Palo Alto Networks, followed by Lucid Group, eBay, and TJX on Wednesday. On Thursday, Alibaba, Autodesk, Block, Booking Holdings, Intuit, Keurig Dr Pepper, Moderna, Newmont, and Warner Bros. Discovery all unveil their earnings.
Tuesday also brings economic updates in the form of the S&P Global Manufacturing and Services Purchasing Managers Indexes for February, with consensus estimates for a 47.2 reading for the manufacturing PMI and 46.7 for the services version. Additionally, the National Association of Realtors will report existing-home sales for January.
On Wednesday, the Federal Open Market Committee will shed some light on its early February monetary-policy meeting with the release of the minutes. Thursday then sees the Bureau of Economic Analysis’ second estimate of fourth-quarter gross-domestic-product growth, with economists expecting a seasonally adjusted annual rate of 2.5%.
The BEA wraps things up on Friday with personal income and expenditures for January, which are anticipated to increase 1% month over month.
Why our clients own LGI Homes:
LGI Homes has several competitive advantages. First, they offer a wide range of budget-friendly home designs, something that many national builders lack. Secondly, they have a streamlined homebuilding process that allows them to keep costs to a minimum. Finally, LGI Homes has established relationships with a number of rural government loan programs which allow buyers to finance the purchase with no money down without LGI taking on the credit risk.
1. Strong financials – LGIH has a strong balance sheet and cash flow position, providing an attractive entry point for investors.
2. Experienced management team – The company is led by a team of experienced executives who have a track record of success in the housing industry.
3. Diversified portfolio of homes – LGIH has a diverse portfolio of manufactured, modular, and site-built homes, giving them flexibility to meet the needs of a broad range of customers.
4. Growing demand for housing – The housing market is strengthening and LGIH is well-positioned to capitalize on this growth as demand for housing continues to increase.
5. Attractive valuation – LGIH has strong earning a quality and trades at 12.5x NTM PE. Net income has also grown by 41% annually over the last 5 years, making it an attractive opportunity for investors seeking value in the housing sector.
Chart of the week: 2022 was the worst year for car sales since 2011. This was driven by higher rates, prices, and inventory.
Disclaimer: The author of this blog is a financial advisor but may not be the right advisor for you. In fact, the author may not even be the right advisor for themselves. Please consult a qualified professional before making any financial decisions based on the content of this blog. And remember, just because the author has a fancy title and a briefcase full of spreadsheets, doesn't mean they know what they're doing.