For well-nigh 20 years now, the Motley Fool has been here to help you invest better and smarter, using spot-on analysis and a razor-sharp wit. To celebrate Worldwide Invest Better Day on September 25, we are taking some time to get back to the basics -- of investing, that is. In that spirit, I have rounded up some sweet financial sector stocks that have been showing some real sparkle and promise lately.
Without further ado, let me introduce you to the focus of this particular article: High-flying homebuilder Lennar (NYSE: LEN).
Feeling a lift from a recovering housing market
Lennar is headquartered in sunny Miami, Florida and has been in the house building business for nearly 60 years. The company constructs homes for middle-market buyers, unlike Toll Brothers (NYSE: TOL), a builder that caters to the high-end luxury market. The housing resurgence is giving all house builders a lift, though -- as evidenced by Lennar's awesome Q3 numbers delivered today.
Over the past year, Lennar has seen its revenue increase by 34% and its backlog jump by 79%. New orders were up 44%, and cancellations fell to 17% from 20% year over year. Gross margins improved as well, by 210 basis points, to 23.2% from a year ago 21.1%.
Other homebuilders have had a better year, too. Toll Brothers saw backlog climb to 59% and a net profit spike of 46%, reflecting consistent demand not seen for the past five years. KB Homes (NYSE: KBH) also turned in decent numbers last week, reporting an 18% jump in revenue. Beazer Homes (NYSE: BZH), which has yet to turn a profit, missed on analysts' projections -- but still turned in a whopping 47% gain in revenue.
It's official: Housing is on its way back to normalcy
Housing seems to be finally on the mend, with more consistent demand and fewer sputters and stalls. A peek at the two major homebuilders exchange-traded funds shows that the SPDR Homebuilders ETF has seen a jump in its stock price of over 90% in the last year, and the iShares Dow Jones US Home Construction ETF (NYSE: ITB) has experienced a stock value rise of 125% during the same time period. Homebuilders' stocks, quite naturally, are included in these funds.
The demand for housing can only increase, and, with many markets experiencing a shortage of homes for sale, new houses look particularly inviting to home buyers. With mortgage rates staying low and possibly declining over the next three years, Lennar stands to do well with its mid-market type of housing that appeals to everyman.
Currently, the demand for new houses is rivaling the stampede experienced back in April of 2010, right before the expiration of the Obama administration's tax credits meant to buoy home sales. With a depressing jobs outlook and an open-ended QE3 in effect, homebuilders like Lennar are looking like a bright spot in an otherwise dim economic picture.
I'll be covering other great stocks over the next couple of weeks, as will my fellow Fools. Check out our special website set up especially for this investing extravaganza at InvestBetterDay.com. There will be lots of great articles posted there through September 25, all with a particularly informative take on various facets of investing. We'd love to have you on board, too -- so click through to the site and prepare to be informed and amused by the never-dull world of investing!
