6 Stocks That Will Benefit From a Dovish Federal Reserve - 2 of 6

#2 - D.R. Horton (NYSE:DHI)

Right now investing in the stock of a homebuilder may seem suicidal. Who’s going to buy a home when they can’t leave the one they’re in now. Fair enough. However the argument for a stock like D.R. Horton (NYSE:DHI) is that wise investors play the long game. And here’s what we know.

When the Fed first cut interest rates in July, prospective home buyers largely shrugged it off. But when they cut rates again, it started having an impact. Anecdotally, in my small area of the country, many landlords were finding it difficult to find tenants. And realtors were busy around the holidays. Really busy.

And when we come out of this pandemic, and we will, prospective home buyers will continue to buy and build new homes. Investors seem to believe the same. DHI stock was up nearly 70% on a year-over-year basis at the end of January. The stock plunged by that amount, and more, as the news of the Covid-19 pandemic broke.

However, as the news cycle has begun to change, so have the prospects for D.R. Horton. Yes, cancellations are up. And yes, the company has withdrawn guidance based on uncertainty surrounding the impact of the virus. But lower interest rates will keep mortgage rates low and that should be a good sign for the company later in 2020 and beyond.

About D.R. Horton

D.R. Horton, Inc operates as a homebuilding company in East, North, Southeast, South Central, Southwest, and Northwest regions in the United States. It engages in the acquisition and development of land; and construction and sale of residential homes in 118 markets across 33 states under the names of D.R. Read More 

Current Price

$145.91

Consensus Rating

Moderate Buy

Ratings Breakdown

12 Buy Ratings, 4 Hold Ratings, 2 Sell Ratings.

Consensus Price Target

$154.00 (5.5% Upside)