Key Points
Homebuilder stocks are surging as the sector outperforms the market.
Key players like PulteGroup and Toll Brothers demonstrate strong performance amid the surge.
The SPDR S&P Homebuilders ETF has climbed over 36% year-to-date, outpacing the overall market in the same period.
5 stocks we like better than PulteGroup
Few sectors have impressed as significantly as the homebuilder sector in recent weeks. The SPDR S&P Homebuilders ETF NYSE: XHB has risen over 16% over the last month. This performance is better than the overall market, which has risen 7%, and the technology sector, which has risen 12% in the same period.
Notably, two leading companies within the sector have shown an impressive rally and achieved new 52-week highs. These moves occurred after both stocks traded near their 200-day simple moving average (SMA) just one month ago.
Given the recent outperformance of the sector and attractive technical charts of heavyweight companies within it, it’s worth taking a closer look at the sector.
Two stocks that have caught the eye over the previous month for their relative strength and favorable chart setup are PulteGroup Inc. NYSE: PHM and Toll Brothers Inc. NYSE: TOL. But before analyzing those two names further, let’s first look at the popular sector ETF, the XHB.
Homebuilder sector ETF XHB outpaces the market
The XHB ETF has outpaced the market in recent weeks and year-to-date (YTD), now up just over 36%. But for those unfamiliar with this ETF and investment vehicle, what exactly is the XHB?The SPDR S&P Homebuilders ETF (XHB) strives to mirror the S&P Homebuilders Select Industry Index, focusing on the homebuilding sector within the broader S&P Total Markets Index.
Its portfolio exhibits an 85.3% geographic exposure to the United States and a substantial 40.5% industry exposure to household durables. With an attractive 0.78% dividend yield, managing $1.36 billion in assets and maintaining a modest net expense ratio of 0.35%, XHB has long stood as a prominent investment option.
The ETF includes Toll Brothers as the 17th largest holding with a 3.62% weighting and PulteGroup ranking as the seventh-largest holding, carrying a 3.93% weighting. Both stocks have displayed impressive relative strength recently.
Two homebuilders outshine the rest
PulteGroup focuses on land acquisition and development for residential purposes. Additionally, PulteGroup facilitates financing through mortgage loan origination for homebuyers, selling servicing rights for these loans, and providing various title insurance policies, examinations, and closing services to its clientele.
PHM shares surged by nearly 27% in the last month. Technically, the stock shows potential for an upward trajectory. Consolidating near its 52-week highs within a narrow range, PHM may see a continuation of upside momentum if it can break out above the short-term resistance near $89.
Toll Brothers specializes in developing, constructing, and financing residential and commercial properties. The company maintains a robust financial position, evident in its prudent debt-to-equity ratio, demonstrating responsible management of financial commitments.
Trading at a low P/E ratio of 6.2, the company falls into the value investment category and offers a modest dividend yield of 0.97%. Analysts have given the stock a “moderate buy” rating, reflecting positive sentiment.
In the last month alone, the stock has surged by over 25% and is consolidating above the rising five-day simple moving average (SMA) within a narrow range of $85 to $87. A breakthrough above $87 could trigger further upward momentum for the stock and the entire sector.Before you consider PulteGroup, you’ll want to hear this.usafinancetrends keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. usafinancetrends has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and PulteGroup wasn’t on the list.While PulteGroup currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.View The Five Stocks Here Which stocks are likely to thrive in today’s challenging market? Click the link below and we’ll send you usafinancetrends’s list of ten stocks that will drive in any economic environment.Get This Free Report
