Category: General

3 Homebuilder Stocks to Buy When Inflation Eases

Posted on by The MarketClub Team

According to Bankrate’s national survey of large lenders, the average rate on 30-year mortgages is 6.59%, up 12 basis points compared to this time last week.

Mortgage Interest Rates

Source: Bankrate National Survey

As the cumulative effects of a protracted campaign of interest rate hikes by the Fed are yet to be felt, economic growth, or lack thereof, is expected to replace inflation as the topmost concern.

Amid such a downturn, softening demand from home buyers could end up exerting downward pressure on mortgage rates, thereby restoring equilibrium.

According to Nadia Evangelou, senior economist & director of forecasting at the National Association of Realtors, “If inflation continues to decelerate over the next several months, mortgage rates will likely stabilize below 7%.”

Is the Fed’s target of a 2% inflation rate realistic in the current economic scenario?

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In addition to high margin backlogs to help weather a potential slowdown, moderation of inflation, and consequently mortgage rates, would bode well for home-building stocks D.R. Horton, Inc. (DHI), Toll Brothers, Inc. (TOL), and KB Home (KBH) as some technical indicators point to sustained upsides with adequate downside protection. Continue reading "3 Homebuilder Stocks to Buy When Inflation Eases" →

Merry Christmas From INO.com

Posted on by The INO.com Team

Our office will be closed on Monday, December 26th, along with the U.S. exchanges. We'll be back on Tuesday morning.

No matter what you celebrate (if anything at all), our entire team wishes you health and happiness. We hope you get to spend time with family and friends, truly the greatest gifts.

If you haven't joined MarketClub during the MarketClub Holiday Deal, you still have time. This great rate (only available until December 31st) is our gift to you.

Happy holidays to you and we are excited to help you reach your financial goals in 2023.

As always, thank you and best wishes,
The INO.com Team

1 Utilities Stock Too Cheap To Ignore

Posted on by The MarketClub Team

It has been a challenging year for the stock market as most equities have witnessed a sell-off due to various macroeconomic and geopolitical concerns.

However, retail energy and renewable energy solutions provider Genie Energy Ltd. (GNE) has gained 84.7% in price year-to-date and 90.6% over the past year to close the last trading session at $10.29.

The stock’s strong performance can be attributed to the rise in energy prices that led to strong earnings for the company.

Post its third-quarter earnings, GNE’s CEO Michael Stein, said, “We reported record third-quarter profit metrics driven by strength in Genie Retail Energy (GRE), our domestic retail energy business. GRE continued to outperform in a volatile energy price environment. We were well-positioned with our customer book and hedges heading into the quarter and were able to drive a 54% gross margin and generate nearly $28 million in Adjusted EBITDA.”

Its Genie Renewables (GREW) segment also did well as it acquired site rights to 64MW solar projects and advanced them through its permitting processes.

“Given the challenging environment in the European energy market, we determined that the risk was beyond our acceptable tolerances. As a result, we exited our remaining international retail operations and no longer serve customers in Scandanavia,” he added.

GNE is trading at a discount to its peers. In terms of trailing-12-month GAAP P/E, GNE's 5.44x is 73.5% lower than the 20.53x industry average. Its trailing-12-month EV/S of 0.55x is 86.4% lower than the 4.05x industry average. Also, the stock's 2.07x trailing-12-month EV/EBITDA is 84.4% lower than the 13.30x industry average.

On November 30, 2022, GNE announced the acquisition of a portfolio of residential and small commercial customer contracts from Mega Energy. GNE’s CEO Michael Stein said, “Our strong balance sheet, with significant cash reserves, positions us to compete for additional books of business at favorable prices. We will continue to look for customer acquisition opportunities as specific markets become more conducive to growth.”

The acquisition helps it acquire new customers across seven states in the Northeast and Midwest. The portfolio comprises approximately 11,000 residential and commercial customer meters, and it is expected to be revenue and earnings accretive for the company immediately. Continue reading "1 Utilities Stock Too Cheap To Ignore" →

2 Retail Stocks Ready for a Santa Claus Rally

Posted on by The MarketClub Team

The Federal Reserve met broad expectations by reducing its interest rate hike to 50 bps this month. However, its emphasis on taming inflation further by raising interest rates in the foreseeable future has dampened the optimism that had kept markets buoyant in the run-up to yesterday’s announcement.

However, in the run-up to year-end festivities, consumer spending is also set to increase, thereby adding more wind to the sails of businesses that have been under pressure by aggressive interest rate hikes and other macroeconomic headwinds for a greater part of the year.

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Hence, it could be wise to buy The TJX Companies, Inc. (TJX) and Five Below, Inc. (FIVE) to capitalize on increased consumer spending during the holidays. These stocks show strong trends.

The TJX Companies, Inc. (TJX)

TJX is an off-price apparel and home fashion retailer in the United States and internationally. The company’s operating segments are Marmaxx; HomeGoods; TJX Canada; and TJX International.

TJX’s revenue has exhibited a 6.6% CAGR over the past three years. During the same time horizon, the company’s EBITDA and net income have also grown at 2% and 2.8% CAGRs, respectively.

During the nine months of the fiscal year ended October 29, 2022, TJX’s net sales increased 2.1% year-over-year to $35.42 billion. During the same period, the company’s net income increased 5% and 8.3% year-over-year to $2.46 billion and $2.08, respectively.

Analysts expect TJX’s revenue and EPS for fiscal 2023 to increase 2% and 9.3% year-over-year to $49.51 billion and $3.12, respectively. The company has surpassed consensus EPS estimates in three of the trailing four quarters.

Owing to its strong performance and solid growth prospects, TJX is currently commanding a premium valuation compared to its peers. In terms of forward P/E, TJX is currently trading at 25.41x compared to the industry average of 12.88x. Also, its forward EV/EBITDA multiple of 17.26 is higher than the industry average of 9.15. Continue reading "2 Retail Stocks Ready for a Santa Claus Rally" →