Yup, LGIH. Saul exited end of December/early January at between $80 and $82, as I recall. During today’s trading it hit $39.50-something. Trailing p/e of 6.8, forward p/e of 6.3 (might well see revisions after November 6’s Q3 release).
Eps growth 35%, and forward 35%. 2019 projected 19%, so 1yPEG quite attractive.
Increased closing estimates after Q2 and held them after September closings report earlier this week.
Obvious sources of forecasted bad news, from inflation to affordability to tariffs on appliances to mortgage rates to housing cycle.
Closed at $41.21.
KC, long LGIH, added a nibble today at $40.02 (and two other buys this week)
Strong economy, record unemployment, affordable housing shortage.
LGIH: growing, adding number of communities in fast growing areas (Texas and North Carolina are extremely hot right now). Pricing is attractive to middle class. Profitable.
PE is laughably low, even compared to the sector average, I really don’t get it. I’ve been tempted to buy some at this at this level but seriously what am I missing. Even getting to a PE of 12 would be almost a double in share price at this point.
Cyclical industries are only ever briefly, if at all, given a fair value (LGIH’s fair value was at $70-$80 imo). The slightest whiff of a slowdown or other bad news (and LGIH’s was when it’s comps got very tough from the stellar previous year) and everyone bails, because when the REAL slowdown/oversupply comes, if you’re not out already, you’re holding the bag…don’t be left holding the bag.
Same with Micron (MU) and Western Digital (WDC), to look at another cyclical industry. Trailing PEs of around 3.8, forward PEs of 4, bringing in billions in cash, yet never get valued with even a reasonable PE because sooner or later, something out of their control will kill their markets (at least temporarily), until the next boom cycle.
I luckily got out of LGIH near the upper range (accumulated from $20-$40, sold $60-$75, thanks to this board). But I am still holding the other 2 stocks mentioned, MU and WDC. They aren’t growth stocks for this board, but WDC authorized a $5B buyback, which is over 30% of their market cap, that will get the stock price back up as they implement it, provided the rest of the business doesn’t hit the crapper at the same time. I’m holding for now because I think there are adequate catalysts for these 2 beaten down stocks that their stock performance could prove very profitable (even compared to the typical Saul stock).