S&P 500   3,852.36
DOW   32,920.46
QQQ   303.59
Mullen Automotive Stock, The Tide Has Turned
A gold storm is coming… (Ad)
Energizer Holdings Inc; Losing Power Or Electrifying Time To Buy?
What do Mastercard Earnings Indicate About Consumer Spending?
The #1 Energy Stock to Buy (Ad)
How to Find Penny Stocks to Invest and Trade
ONSemi Is Marching Higher On Great Results
The #1 Energy Stock to Buy (Ad)
What Tyson Foods Q1 Means For Staples Stocks
Can Cummins Power To A New High? 
S&P 500   3,852.36
DOW   32,920.46
QQQ   303.59
Mullen Automotive Stock, The Tide Has Turned
A gold storm is coming… (Ad)
Energizer Holdings Inc; Losing Power Or Electrifying Time To Buy?
What do Mastercard Earnings Indicate About Consumer Spending?
The #1 Energy Stock to Buy (Ad)
How to Find Penny Stocks to Invest and Trade
ONSemi Is Marching Higher On Great Results
The #1 Energy Stock to Buy (Ad)
What Tyson Foods Q1 Means For Staples Stocks
Can Cummins Power To A New High? 
S&P 500   3,852.36
DOW   32,920.46
QQQ   303.59
Mullen Automotive Stock, The Tide Has Turned
A gold storm is coming… (Ad)
Energizer Holdings Inc; Losing Power Or Electrifying Time To Buy?
What do Mastercard Earnings Indicate About Consumer Spending?
The #1 Energy Stock to Buy (Ad)
How to Find Penny Stocks to Invest and Trade
ONSemi Is Marching Higher On Great Results
The #1 Energy Stock to Buy (Ad)
What Tyson Foods Q1 Means For Staples Stocks
Can Cummins Power To A New High? 
S&P 500   3,852.36
DOW   32,920.46
QQQ   303.59
Mullen Automotive Stock, The Tide Has Turned
A gold storm is coming… (Ad)
Energizer Holdings Inc; Losing Power Or Electrifying Time To Buy?
What do Mastercard Earnings Indicate About Consumer Spending?
The #1 Energy Stock to Buy (Ad)
How to Find Penny Stocks to Invest and Trade
ONSemi Is Marching Higher On Great Results
The #1 Energy Stock to Buy (Ad)
What Tyson Foods Q1 Means For Staples Stocks
Can Cummins Power To A New High? 

7 Stocks to Buy During a Housing Downturn

7 Stocks to Buy During a Housing Downturn

The housing market is one of the most cyclical sectors for investors to navigate. During bull markets, you can metaphorically put on a blindfold, throw a dart at a listing of stock tickers, and make a profit. And as you know the housing market is one of the first sectors to recover in a bull market.

The opposite is true as well. The housing market is one of the first sectors to signal economic pain is on the horizon. Just in the past 30 years, you can see the correlation between the housing market and the broader market.

But there's always money to be made in the market, if you know where to look. There are several companies that investors can look to during a housing downturn. That's the focus of this special presentation. These companies give investors reasons beyond home building or home buying to own their stock. These may not be robust growth stocks, but during a housing downturn, you'll take a little growth over a loss any day.

Quick Links

  1. Sun Communities
  2. American Tower
  3. Prologis
  4. Ventas
  5. Eagle Materials
  6. Lowe’s
  7. Home Depot

#1 - Sun Communities (NYSE:SUI)

Sun Communities logo

Sun Communities (NYSE:SUI) owns and operates manufactured home communities that also includes recreational vehicle (RV) and marina resorts. One aspect of manufactured home communities is that many include a combination of homes that the resident owns and others that are available for rent. And historically, rent prices tend to increase for about a year after home prices crash.

That means that at the beginning of a housing downturn investing in companies with exposure to rental properties can be a way to diversify your portfolio. SUI stock is down 30% in 2022, but it’s been a consistent performer over the last five years rewarding investors with a 56% gain outside of the dividend. And the company is expected to grow revenue at around a 10% rate in the next five years.

And with a dividend yield right around 2.5% which is in line with the S&P 500 average. And with an annual payout of $3.52 per share, Sun Communities gives investors a good reason to own the stock even in a housing downturn.

About Sun Communities

Sun Communities, Inc provides real estate management services. The firm operates through the following segments: Manufactured Home Communities, Recreational Vehicle, and Marina. The Manufactured Home Communities segment owns, operates, and develops manufactured housing communities and is in the business of acquiring, operating, and developing ground up communities to provide housing solutions. Read More 
Current Price
$159.63
Consensus Rating
Buy
Ratings Breakdown
7 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$168.86 (5.8% Upside)




#2 - American Tower (NYSE:AMT)

American Tower logo

Real estate investment trusts (REITs) offer investors a conservative way to invest in real estate. REITs own and collect rent from the properties they own. This means that successfully investing in a REIT has a lot to do with what properties a REIT owns.

That brings us to American Tower (NYSE:AMT). The company’s portfolio consists mostly of cellular towers spread across 25 countries on six continents. 

American Tower has been on investors’ radars for several years because of the necessity to build out the 5G infrastructure not just in the United States but around the world. The 5G buildout is expected to last for several years and American Tower has a wide moat. It shares the U.S. market with Crown Castle International (NYSE:CCI) and SBA Communicaions (NASDAQ:SBAC).

The AMT stock price has increased 48% over the last five years. And investors get a growing dividend that has a yield of 2.63% and an annual payout of $5.88 per share.

About American Tower

American Tower Corp. provides real estate investment services, and owns, operates, and develops multi-tenant real estate properties. It operates through the following segments: U.S. & Canada, Asia-Pacific, Europe, Africa Latin America, and Services. The Asia-Pacific segment refers to the operations in Australia and India. Read More 
Current Price
$220.57
Consensus Rating
Buy
Ratings Breakdown
13 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$266.06 (20.6% Upside)




#3 - Prologis (NYSE:PLD)

Prologis logo

The second of the three REITs on this list is Prologis (NYSE:PLD). The company is an investment in the industrial supply chain. The company owns over 1 billion square feet of leased space. And in the last 10 years, Prologis has benefited from the need for companies to add real estate for warehouses and distribution centers.

Even if the rate of growth slows in the current recession, this demand is expected to continue for the rest of the decade. And that will fuel the company’s growth. Revenue is forecast to grow by approximately 20% over the next five years. PLD is up 75% in the last five years. And that’s in addition to a dividend that has a 2.72% dividend ratio, an annual payout of $3.16 per share, and one that has been increasing for the last nine years.

About Prologis

Prologis, Inc engages in the provision of real estate investment trust services. It operates through Real Estate Operations and Strategic Capital segments. The Real Estate Operations segment represents the ownership and development of logistics properties and also includes rental revenues, recoveries and expenses recognized from its consolidated properties. Read More 
Current Price
$131.44
Consensus Rating
Buy
Ratings Breakdown
16 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$145.00 (10.3% Upside)




#4 - Ventas (NYSE:VTR)

Ventas logo

The last of the REITs on this list is Ventas (NYSE:VTR) which gives you exposure to the health care sector and specifically senior health care. The aging of America continues as the baby boomer generation is now entering their golden years. Ventas owns and operates over 1,200 properties that focus on senior housing and health care.

The company will benefit from the need to not only house but manage the health care needs of this huge demographic sector. That means that revenue and earnings are not going to be a problem. For example, the company’s revenue took a hit at the onset of the Covid-19 pandemic, but it has largely recovered. And that’s reflected in the company’s stock price which is “only” down 11% in 2022.

And institutional investors own about 92% of VTR stock which means that many investors will Ventas as part of their mutual funds or ETFs. One reason for that is the company’s dividend which currently has a juicy yield of nearly 4%.

About Ventas

Ventas, Inc engages in the acquisition and ownership of seniors housing and healthcare properties. The company invests in seniors housing and healthcare properties through acquisitions and leases its properties to unaffiliated tenants or operates them through independent third-party managers. It operates through the following segments: Triple-Net Leased Properties, Senior Living Operations, and Office Operations. Read More 
Current Price
$51.87
Consensus Rating
Buy
Ratings Breakdown
11 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$57.77 (11.4% Upside)




#5 - Eagle Materials (NYSE:EXP)

Eagle Materials logo

Another way for you to invest in a housing downturn is to invest in the companies that offer the building materials that will be needed as the nation rebuilds its infrastructure. And one of those companies is Eagle Materials (NYSE:EXP).

Eagle Materials supplies both the heavy construction materials and light building materials that will be in demand as the nation undertakes a variety of projects. That’s being reflected in the company’s revenue and earnings which are up on a year-over-year basis. That trend is likely to continue with single digit growth in revenue and earnings.

EXP stock has a Moderate Buy rating by a consensus of analysts tracked by MarketBeat. And the stock has a 12% upside from its current price. And unlike some of the stocks on this list, EXP stock looks to have a fair valuation and may even be slightly undervalued. On the other hand, Eagle Materials does not pay a significant dividend.

About Eagle Materials

Eagle Materials, Inc engages in the provision of heavy construction materials and light building materials. It operates through the following segments: Cement, Concrete and Aggregates, Gypsum Wallboard, and Recycled Paperboard. The Cement segment deals with the manufacture, production, distribution, and sale of Portland cement. Read More 
Current Price
$147.28
Consensus Rating
Buy
Ratings Breakdown
5 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$151.13 (2.6% Upside)




#6 - Lowe’s (NYSE:LOW)

Lowe

The last two stocks on this list are somewhat contrarian picks. Several analysts will say that home improvement stocks are not a good investment during a housing downturn. And that’s an understandable opinion.

Lowe’s (NYSE:LOW) is a good example of a stock that’s been impacted by this opinion. From March 2020 to December 2021, LOW stock bounced 293%. And that was on top of a dividend that the company has grown for 48 consecutive years.

But since that 52-week high, the stock is down 20% as investors believe that the stock will underperform. However, a home is still an investment that needs to be maintained. And when homeowners are looking to beautify or update their home, they will turn to home improvement companies.

To that end, Lowe’s is posting revenue and earnings that are comparable to their numbers from 2021. That suggests that home improvement may still be in a multi-year bull cycle.

About Lowe's Companies

Lowe's Cos., Inc engages in the retail sale of home improvement products. The firm offers products for maintenance, repair, remodeling, home decorating and property maintenance. It also provides home improvement products in the following categories: appliances, bathroom, building supply, electrical, flooring, hardware, paint, kitchen, plumbing, lighting & fans, outdoor living, windows and doors. Read More 
Current Price
$215.87
Consensus Rating
Buy
Ratings Breakdown
14 Buy Ratings, 8 Hold Ratings, 2 Sell Ratings.
Consensus Price Target
$229.12 (6.1% Upside)




#7 - Home Depot (NYSE:HD)

Home Depot logo

Home Depot (NYSE:HD) represents the other half of the duopoly in home improvement stocks. When it comes to loving the home you have, many consumers think immediately of Home Depot’s signature orange signage.

One reason that you can be bullish about Home Depot is that the company is now an omnichannel retailer. That means consumers can place orders digitally and pick up those orders at the store, access curbside delivery, or have the products delivered to their homes.

Prior to the pandemic, some investors were concerned about the expenses that the company was taking on to bulld its digital footprint. But the company was in a unique position to assist homeowners who couldn’t go to the store.

HD stock is down 24% for the year but, like Lowe’s, it is beating earnings and revenue results on a year-over-year basis. And while Home Depot is not yet a dividend aristocrat like Lowe’s, it does offer a dividend with a yield of 2.41% and has a payout of $7.60 on an annual basis.

About Home Depot

The Home Depot, Inc engages in the sale of building materials and home improvement products. Its products include building materials, home improvement products, lawn and garden products and decor products. The firm operates through the following geographical segments: U.S., Canada and Mexico. It offers home improvement installation services, and tool and equipment rental. Read More 
Current Price
$329.27
Consensus Rating
Buy
Ratings Breakdown
17 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$341.24 (3.6% Upside)



 

As you can see, many of the stocks on this list are good stocks to own at any time. But if you're looking to maintain a diversified portfolio in a housing downturn, the stocks listed here are solid choices. One reason for that as you read is that many of these stocks pay a dividend. So you get paid even if the stock doesn't provide market-beating capital growth.

And just like other sectors, when investing in the housing sector it's important to focus on areas of the market that are likely to be recession proof. In 2022, that means looking at health care and stocks that allow you to take advantage of increased infrastructure spending which will likely prop up the market in the next several years.

If you're looking for a different way to invest in this housing downturn, you could consider an exchange-traded fund (ETF) that focuses on housing infrastructure are the Invesco Dynamic Building & Construction ETF (NYSEARCA:PKB) and the Hoya Capital Housing ETF (NYSEARCA:HOMZ). Investors with a higher risk tolerance may want to look at an inverse ETF such as the ProShares UltraShort Real Estate (NYSEARCA:SRS).

More Investing Slideshows: