Benchmark analyst Reuben Garner says, “We believe the top to bottom focus on becoming the largest player in the space has come at the perfect time, The high growth profile of the business and management’s outstanding track record leads us to believe Azek is primed to take advantage of a secular boom in outdoor living.” The recent increase in real estate stocks, particularly those tied to homebuilding, offers promising investment opportunities in the sector. Both the SPDR S&P Homebuilders ETF (XHB) and the iShares U.S. Home Construction ETF (ITB) closed the week more than 10% higher, marking their strongest performance of 2024. This surge was largely driven by investor speculation that a favorable consumer price index might lead the Federal Reserve to lower interest rates. With declines in technology stocks, traders shifted focus to real estate assets, anticipating benefits from a lower-rate environment.
This trend indicates potential for further growth in homebuilding stocks. CNBC Pro identified top performers in this sector, selecting stocks within these ETFs that received buy ratings from at least 55% of analysts and had an average price target indicating at least a 10% upside. Toll Brothers was highlighted, receiving a 55% buy rating with expectations of a 15% increase in its share price. Despite challenging economic conditions, Wells Fargo analyst Sam Reid praised Toll Brothers for its market share gains and attractive valuation compared to historical norms, recognizing positives amid broader economic uncertainties.
Another standout was Azek, a housing products manufacturer, endorsed by two-thirds of analysts with a buy rating and an average price target suggesting nearly a 20% potential gain. Reuben Garner praised Azek’s strategic focus on outdoor living products, positioning it well for growth in this expanding market segment. Similarly, furniture retailer Arhaus received buy ratings from about two-thirds of analysts, anticipating a 16% gain over the next year. Barclays analyst Seth Sigman highlighted Arhaus’s market share growth as a key strength, suggesting its strategic initiatives could counteract broader weakness in the retail sector.
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