1. Lennar Corporation (NYSE:LEN)
Number of Hedge Fund Holders: 70
Lennar Corporation (NYSE:LEN) is another major American homebuilder that constructs affordable, move-up, and active adult homes under the Lennar brand name. The company is also a developer of multifamily rental properties, a provider of title insurance and closing services as well as an originator of residential and commercial mortgage loans.
As one of the nation’s largest builders of quality homes, Lennar Corporation continues to expand its footprint into new markets. Recently, the homebuilder completed the acquisition of a residential homebuilder based in Arkansas, Rausch Coleman Homes. While pursuing its strategy of becoming a pure-play land-light manufacturer of homes, Lennar completed the spin-off of Millrose Properties which is involved in purchasing and developing residential land and selling finished homesites to the homebuilder.
With mortgage rates rising through the fourth quarter of 2024, the housing market and the quarter remained challenging for Lennar. The results ended up missing expectations with new orders falling ninety-five short of the nineteen thousand the firm expected, and the gross margin falling to 22.1%, short of the 22.5% it expected. The homebuilder continued to adjust sales price, incentives, and margin to activate sales and manage inventory levels amidst a low desire and ability to transact among the consumers. Inflation and higher interest rates have majorly restricted this ability.
While we acknowledge the potential of LEN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than LEN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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