10 Best Consumer Discretionary Stocks To Buy According to Hedge Funds

7. Lennar Corporation (NYSE:LEN)

Number of Hedge Fund Holders: 75

Lennar Corporation (NYSE:LEN) is one of the largest home builders in the US. The company also provides other services beyond homebuilding, including mortgage financing through its subsidiary, Lennar Mortgage, and title insurance services. The company has also pioneered innovative home designs, such as the Next Gen model, which caters to multigenerational living.

While the recent housing market fluctuations have made a few analysts skeptical about companies like Lennar (NYSE:LEN), it is still a fundamentally strong company with several future growth catalysts. With the increasing likelihood of a Fed rate cut, the company stands to benefit significantly. A reduction in interest rates could lead to lower mortgage rates, which could increase demand for new homes, a market where Lennar (NYSE:LEN) is one of the most dominant players.

According to a report published by the National Association of Home Builders (NAHB) in February, the U.S. housing market is expected to experience a gradual recovery in 2024, driven by anticipated Fed interest rate cuts in the latter half of the year. Lennar (NYSE:LEN) primarily focuses on single-family homes and the NAHB economists said that despite higher interest rates pushing down single-family housing starts (new construction activity) in 2022 and 2023, they see a 4.7% increase in starts in 2024 and a further 4.2% rise in 2025.

Moreover, Lennar (NYSE:LEN) is trading at a low multiple of 11.8x its 2024 earnings compared to the 15x sector median. While the company is expected to grow its earnings by merely 4.2% year-over-year in 2024, analysts expect better growth in 2025, and their consensus estimates predict a 17.4% growth in the company’s per-share earnings from 2023 levels.

As of the first quarter of the year, 75 hedge funds had stakes worth $3.9 billion in Lennar (NYSE:LEN), bringing the company to 7th position on our list of best consumer discretionary stocks. Greenhaven Associates is the company’s most prominent shareholder with 8.9 million shares worth $1.5 billion as of Q1.