Connect with us

Economics

Bes Construction Stocks to Buy for Your Portfolio

To put it lightly, the best construction stocks have been battered so far this year. Can these stocks get back on track?
The post Bes Construction Stocks…

Published

on

To put it lightly, construction stocks have been battered so far this year. For instance, the iShares US Home Construction ETF is down over 33% year-to-date. The SPDR S&P Homebuilders ETF is down around 33% also. Investors may want to take a closer look at construction stocks for a possible rebound.

Interestingly, those home construction ETFs had a great run after onset of the COVID pandemic selloff in 2020. Both ETFs more than doubled from their early 2020 lows before crashing this year. There are a several reasons that construction stocks have fallen this year.

When COVID-related stay-at-home restrictions came into effect in 2020, folks weren’t spending money on dining out, traveling, etc. So, they saved the extra cash. In addition, stimulus checks from the federal government further padded the savings accounts of potential homebuyers. As the stay-at-home restrictions were lifted, those folks entered the housing market with gusto. Now potential homebuyers are faced with new challenges and the new construction market has cooled considerably.

In 2021, the Federal Reserve began to raise interest rate to temper a red-hot economy. As that happened mortgage rates also rose. When mortgage rates rise, the higher mortgage payments make it more difficult for folks to afford new homes.

On top of that, construction stocks are facing the same supply chain issues that every other stock is facing. Since construction stocks aren’t getting the building material they need, they cannot build new homes as fast as they would like.

To make matters worse, inflation has been a bugaboo for construction stocks. Lumber and other commodities used to build new homes have jumped this year. The increased cost to build a home has cut into the profits of construction stocks.

Here are a few construction stocks that could pay off in a recovery.

Two Best Construction Stocks: Residential Construction

Toll Brothers (NYSE: TOL) and Lennar (NYSE: LEN) are two stocks poised to jump when new home construction rebounds.

Lennar is the largest home builder in the US. In addition to building new homes, the company also originates loans for homeowners, condo owners and apartment building investors. According to its most recent annual report, Lennar is involved in all phases of planning and building in our residential communities, including land buying, site planning, preparation and improvement of land and design, construction and selling of homes. The company builds homes in four regions in the US.

  • East: Florida, New Jersey, Pennsylvania, and South Carolina
  • Central: Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina, Tennessee, and Virginia.
  • West: Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah, and Washington.
  • Texas: Texas

Lennar stock trades at a P/E ratio of only 5.6x, which is well below its five-year average P/E ratio of about 10x. In addition, the stock pays a dividend yield of over 2%.

Toll Brothers is one of the leading builders of luxury homes in the US. According to its website, the company operates its own architectural, engineering, mortgage, title, land development, golf course development, smart home technology and landscape subsidiaries. The company also operates its own lumber distribution, house component assembly and manufacturing operations.

Toll Brothers was named the World’s Most Admired Homebuilder in FORTUNE magazine’s 2022 survey of the World’s Most Admired Companies. It is also the first two-time winner of Builder of the Year from Professional Builder Magazine. Toll Brothers stock trades at a P/E ratio of 5.6x, which is below its five-year average of 11x. The stock also pays a dividend yield of 1.8%.

Construction Stock Giants

Caterpillar (NYSE: CAT) and Jacobs Engineering Group (NYSE: J) are two constructions stocks that could take advantage of infrastructure spending in the coming years.

Caterpillar is one of the world’s leading makers of construction and mining equipment, diesel and natural gas engines, gas turbines and trains. The company’s most recent investor presentation noted:

“Our competitive advantages include our independent Cat dealer network. With 160 dealers and about 2,700 branches or facilities in 193 countries around the world in 2021, it’s the most extensive sales and service network in our industry. When customers buy our products, they know they will be supported by the most capable and reliable global service network. As a result of our products and our dealers, we are a leader in almost all of our product classes in the industries in which we participate.”

Caterpillar stock trades at a P/E ratio of 15.5x and pays a dividend yield of 2.6%.

Jacobs is an industrial engineering firm focused on solving the world’s most critical problems. The majority of Jacob’s business comes from infrastructure, energy, security, and science industries. According to its most recent presentation, Jacob made $6 billion in ESG revenue. In the presentation CEO Steve Demetriou said, “As a purpose-led company, we know we have a pivotal role to play in responding to the climate crisis and we are proud to accept the challenge.”

Though the stock is down 10% this year, it trades at a P/E ratio of over 43x. In addition, it pays a modest dividend yield of .7%.

Investing in Construction Stocks

Unite Rentals (NYSE: URI) could be a construction stock to benefit from a boom in 2022. United Rentals is one of the largest construction equipment rental stocks in the US. The company boasts a #1 position with 15% market share. United has nearly 2,000 branches in the US, 140 in Canada and 28 in Australia. Its fleet of rental equipment has more than 800,000 units.

The company serves many industries including power, oil and gas, food, paper and biotech. Since equipment rental is short-term in nature, the business can have ups and downs due to lumpy construction cycles. The company’s diverse customer base helps smooth out the ups and downs for United. Other rental businesses cannot say the same thing.

In addition, United has increased its online business. For instance, sales from its website rose about 35% in 2021. On top of that, customers who make up 60% of its fourth quarter sales are via digital services. United’s stock is down almost 25% this year and has a P/E ratio of 12x. The stock does not pay a dividend.

However, you can discover some of the best construction stocks that may enhance your portfolio. Whether that’s Unite Rentals or not will come down to your specific interests. In fact, it’s important to balance your portfolio and do your due diligence and research before making any investment decisions.

The post Bes Construction Stocks to Buy for Your Portfolio appeared first on Investment U.

Read More

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Economics

Reduced myocardial blood flow is new clue in how COVID-19 is impacting the heart

Patients with prior COVID may be twice as likely to have unhealthy endothelial cells that line the inside of the heart and blood vessels, according to…

Published

on

Patients with prior COVID may be twice as likely to have unhealthy endothelial cells that line the inside of the heart and blood vessels, according to newly published research from Houston Methodist. This finding offers a new clue in understanding covid-19’s impact on cardiovascular health.

Credit: Houston Methodist

Patients with prior COVID may be twice as likely to have unhealthy endothelial cells that line the inside of the heart and blood vessels, according to newly published research from Houston Methodist. This finding offers a new clue in understanding covid-19’s impact on cardiovascular health.

In a new study published today in JACC: Cardiovascular Imaging, Houston Methodist researchers examined the coronary microvasculature health of 393 patients with prior covid-19 infection who had lingering symptoms. This is the first published study linking reduced blood flow in the body and COVID-19.

Using a widely available imaging tool, called positron emission tomography (PET), researchers found a 20% decrease in the ability of coronary arteries to dilate, a condition known as microvascular dysfunction. They also found that patients with prior COVID-19 infection were more likely to have reduced myocardial flow reserve – and changes in the resting and stress blood flow – which is a marker for poor prognosis and is associated with a higher risk of adverse cardiovascular events.

“We were surprised with the consistency of reduced blood flow in post covid patients within the study,” said corresponding author Mouaz Al-Mallah, M.D., director of cardiovascular PET at Houston Methodist DeBakey Heart and Vascular Center, and president elect of the American Society of Nuclear Cardiology. “The findings bring new questions, but also help guide us toward further studying blood flow in COVID-19 patients with persistent symptoms.”

Dysfunction and inflammation of endothelial cells is a well-known sign of acute Covid-19 infection, but little is known about the long-term effects on the heart and vascular system. Earlier in the pandemic, research indicated that COVID-19 could commonly cause myocarditis but that now appears to be a rare effect of this viral infection.

A recent study from the Netherlands found that 1 in 8 people had lingering symptoms post-covid. As clinicians continue to see patients with symptoms like shortness of breath, palpations and fatigue after their recovery, the cause of long covid is mostly unknown.

Further studies are needed to document the magnitude of microvascular dysfunction and to identify strategies for appropriate early diagnosis and management. For instance, reduced myocardial flow reserve can be used to determine a patient’s risk when presenting with symptoms of coronary artery disease over and above the established risk factors, which can become quite relevant in dealing with long Covid.

Next steps will require clinical studies to discover what is likely to happen in the future to patients whose microvascular health has been affected by COVID-19, particularly those patients who continue to have lingering symptoms, or long COVID.

This work was supported, in part, by grants from the National Institutes of Health under contract numbers R01 HL133254, R01 HL148338 and R01 HL157790.

———————–

For more information: Coronary microvascular health in patients with prior COVID-19 infection. JACC: Cardiovascular Imaging. (online Aug. 16, 2022) Ahmed Ibrahim Ahmed, Jean Michel Saad, Yushui Han, Fares Alahdab, Maan Malahfji, Faisal Nabi, John J Mahmarian, John P. Cook, William A Zoghbi and Mouaz H Al-Mallah. DOI: www.doi.org/10.1016/j.jcmg.2022.07.006

###


Read More

Continue Reading

Spread & Containment

War, peace and security: The pandemic’s impact on women and girls in Nepal and Sri Lanka

The impacts of COVID-19 must be incorporated into women, peace and security planning in order to improve the lives of women and girls in postwar countries…

Published

on

Nepalese girls rest for observation after receiving the Moderna vaccine for COVID-19 in Kathmandu, Nepal. (AP Photo/Niranjan Shrestha)

Attention to the pandemic’s impacts on women has largely focused on the Global North, ignoring countries like Nepal and Sri Lanka, which continue to deal with prolonged effects of war. While the Nepalese Civil War concluded in 2006 and the Sri Lankan Civil War concluded in 2009, internal conflicts continue.

As scholars of gender and war, our work focuses on the United Nations Security Council Resolution 1325 on women, peace and security. And our recently published paper examines COVID-19’s impacts on women and girls in Nepal and Sri Lanka, looking at policy responses and their repercussions on the women, peace and security agenda.

COVID-19 has disproportionately and negatively impacted women in part because most are the primary family caregivers and the pandemic has increased women’s caring duties.

This pattern is even more pronounced in war-affected countries where the compounding factors of war and the pandemic leave women generally more vulnerable. These nations exist at the margins of the international system and suffer from what the World Bank terms “fragility, conflict and violence.”

Women, labour and gender-based violence

Gendered labour precarity is not new to Nepal or Sri Lanka and the pandemic has only eroded women’s already poor economic prospects.

Prior to COVID-19, Tharshani (pseudonym), a Sri Lankan mother of three and head of her household, was able to make ends meet. But when the pandemic hit, lockdowns prevented Tharshani from selling the chickens she raises for market. She was forced to take loans from her neighbours and her family had to skip meals.

Some 1.7 million women in Sri Lanka work in the informal sector, where no state employment protections exist and not working means no wages. COVID-19 is exacerbating women’s struggles with poverty and forcing them to take on debilitating debts.

Although Sri Lankan men also face increased labour precarity, due to gender discrimination and sexism in the job market, women are forced into the informal sector — the jobs hardest hit by the pandemic.

Two women sit in chairs, wearing face masks
Sri Lankan women chat after getting inoculated against the coronavirus in Colombo, Sri Lanka, in August 2021. (AP Photo/Eranga Jayawardena)

The pandemic has also led to women and girls facing increased gender-based violence.

In Nepal, between March 2020 and June 2021, there was an increase in cases of gender-based violence. Over 1,750 incidents were reported in the media, of which rape and sexual assault represented 82 per cent. Pandemic lockdowns also led to new vulnerabilities for women who sought out quarantine shelters — in Lamkichuha, Nepal, a woman was allegedly gang-raped at a quarantine facility.

Gender-based violence is more prevalent among women and girls of low caste in Nepal and the pandemic has made it worse. The Samata Foundation reported 90 cases of gender-based violence faced by women and girls of low caste within the first six months of the pandemic.

What’s next?

While COVID-19 recovery efforts are generally focused on preparing for future pandemics and economic recovery, the women, peace and security agenda can also address the needs of some of those most marginalized when it comes to COVID-19 recovery.

The women, peace and security agenda promotes women’s participation in peace and security matters with a focus on helping women facing violent conflict. By incorporating women’s perspectives, issues and concerns in the context of COVID-19 recovery, policies and activities can help address issues that disproportionately impact most women in war-affected countries.

These issues are: precarious gendered labor market, a surge in care work, the rising feminization of poverty and increased gender-based violence.

A girl in a face mask stares out a window
The women, peace and security agenda can help address the needs of some of those most marginalized. (AP Photo/Niranjan Shrestha)

Policies could include efforts to create living-wage jobs for women that come with state benefits, emergency funding for women heads of household (so they can avoid taking out predatory loans) and increasing the number of resources (like shelters and legal services) for women experiencing domestic gender-based violence.

The impacts of COVID-19 must be incorporated into women, peace and security planning in order to achieve the agenda’s aims of improving the lives of women and girls in postwar countries like Nepal and Sri Lanka.

Luna KC is a Postdoctoral Researcher at the Research Network-Women Peace Security, McGill University. This project is funded by the Government of Canada Mobilizing Insights in Defence and Security (MINDS) program.

Crystal Whetstone does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Read More

Continue Reading

Economics

Target Sets Sights on Holiday Season, Has Plan for High Inventory

Target said that it still expects spillover from inventory rightsizing to the tune of $200 million in the third quarter.

Published

on

Target said that it still expects spillover from inventory rightsizing to the tune of $200 million in the third quarter.

Target's  (TGT) - Get Target Corporation Report strategy is paying off as the company's stock falls on heavy volume following its earnings release. 

Normally, a profit miss as wide as Target's, 39 cents per share vs. expectations of 72 cents per share, would result in a bigger drop than Target's, but the retailer has been prepping the market for this miss all summer. 

The inventory the company built up during the height of the pandemic, as Americans shopped more from home, needs to go, and the only way get rid of the excess product is deep discounts. 

"Back in June, we announced that our team would be undertaking a bold effort to rightsize our inventory position in the categories for which demand patterns have radically changed," CEO Brian Cornell said during the company's earnings call. "While this decision had a meaningful short-term impact on our financial results, we strongly believe it was the best path forward."

Now, looking forward the company sees some overhang for the third quarter, but expects a big holiday season ahead. 

While some fear a recession and what it might do to the economy, Target is convinced that the holiday season will be strong.

Image source: John Smith/VIEWpress.

Target Aims for Holiday Season

While Target is focused on the back-to-school season currently underway, the company expects "spillover" from its inventory issues to be present during the third quarter to the tune of $200 million. 

But the company's own checks suggest that its shoppers are excited about the holiday season. 

"The one thing that seems to be very consistent is a guest and consumer who says they want to celebrate the holiday seasons so we certainly expect that they are going to be celebrating Halloween this year and actively trick or treating and hosting parties with friends and family," Cornell said.

"We know they're looking forward to Thanksgiving and they're going to look forward to celebrating the Christmas holidays and that comes down each and every week as we survey consumers and talk to our guests so that gives us great optimism for our ability to perform during these key holiday seasons"

Real Money

Elevate Your Portfolio

Get actionable market insights from a team of experts who actually invest, trade, and manage money for a living

  • Daily Market Commentary
  • Actionable Trading Ideas
  • Investment Advice

Not only does Target expect a strong quarter, but the company also expects favorable comps as fourth quarter headwinds from a year ago aren't present this time around. 

"Guests already have their sights set on upcoming holidays and seasonal moments in Q3 and beyond," Cornell said.

Target's Q2 Collapse

Target said adjusted earnings for the three months ending in July were pegged at 39 cents per share, down 89% from the same period last year and well shy of the Street consensus forecast of 72 cents per share.

Group revenues, Target said, rose 3.5% to $26 billion, essentially matching analysts' estimates of a $26.04 billion tally. Target said same-store sales rose 2.6%, again shy of the Refinitiv forecast of 3.2%, while operating margins fell to 1.2%, below the group's July guidance of a 2% level. 

Earlier this summer, Target cautioned that its bigger-than-expected 35% build-up in overall inventories over the first quarter would trigger price cuts, adding that deeper discounts would be needed to shift the excess goods onto a customer base that was already pulling back on discretionary spending.

Walmart  (WMT) - Get Walmart Inc. Report, Target's larger big box rival, said Tuesday that improving spending trends, as well as actions the group has taken to shift excess inventory, will ease some of the pressures it expects to face in terms of overall profits over the back half of the year.

Walmart said adjusted earnings for the three months ended in July came in at $1.77 per share, down one penny from the same period last year but well ahead of the Street consensus forecast of $1.62 per share.

Group revenues, the company said, were tabbed at $152.9 billion, an 8.4% increase from last year that topped analysts' estimates of $150.81 billion. U.S. same-store sales rose 6.5% from last year, the company said, firmly topping the Refinitiv forecast. 

Read More

Continue Reading

Trending