Jim Cramer’s Game Plan: 12 Stocks in Focus This Week

1. KB Home (NYSE:KBH)

Number of Hedge Fund Holders: 27

Talking about KB Home (NYSE:KBH), Cramer said:

“We need to talk about KB Home. This is a home builder with a significant presence in California. When so many houses get burned down, you’d think that it might be good for the home builders, particularly KB Home, but there is a real mismatch here. Many of these homes are very expensive.

That’s not KB’s niche. It makes the kind of homes where higher mortgage rates really hurt sales plus the possibility of a draconian immigration policy for the Trump administration will hurt the home builders in two ways. First, they’re gonna have to pay higher wages and then they’re gonna have fewer customers. So even though KB Homes have put up some consistently good numbers all during this big great period for housing, I fear that this stock could end up on the canvas.”

KB Home (NYSE:KBH) is a homebuilding company that constructs and sells various types of residential homes and provides financial services, including insurance, title services, and mortgage banking. The company announced its fourth quarter and full year 2024 today. It reported notable growth, achieving a 19% increase in revenues and a 36% rise in diluted earnings per share compared to the previous year.

The company’s revenue growth in the fourth quarter was driven by a higher number of deliveries, which were made possible by faster build times. Net orders also saw a significant increase of around 40% year-over-year, reflecting strong buyer demand for homeownership and an improving housing market, despite challenges related to mortgage interest rates.

This positive performance helped KB Home (NYSE:KBH) reach nearly $7.0 billion in total revenues for 2024, with a diluted earnings per share of $8.45. Operationally, the company had a successful year, opening 106 new communities, reducing build times, and achieving the highest level of customer satisfaction in its history.

While we acknowledge the potential of KB Home (NYSE:KBH) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than KBH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

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