A large-cap homebuilder like PulteGroup, Inc. (NYSE:PHM), D.R. Horton, Inc. (NYSE:DHI), likewise, looks a ripe pick for a rally should the U.S. House give the comprehensive immigration reform bill its nod. It has communities in 29 states and offers various home types from triplex to luxury homes in master-planned communities.
The blessings of the recent upsurge in the home market were evident in the company’s fiscal 2013 second-quarter earnings. For this period, its pre-tax income rose 236% to $142.1 million, while net income was up 173% to $111 million, or $0.32 per diluted share. Net sales orders gained 34% year over year to 7,879, and by 52% to $2 billion in terms of value. A position in D.R. Horton, Inc. (NYSE:DHI) shares, as in PulteGroup, Inc. (NYSE:PHM)’s, also appears inviting at its current price level is about 30% below the 52-week high of $27.75.
Mouse clicks may also deliver
Further activity in the home resale market can also be expected with the U.S. Congress approval of the comprehensive immigration reform bill. This, in turn, can extend possible investor gains to the online real estate search portal Zillow Inc (NASDAQ:Z).
The company boasts of over 50 million unique users monthly and has added mobile apps to its web-based facilities to provide searches not only on homes for sale, but also residential rental properties. This June, the company launched its first-ever national TV ad campaign to further attract more users of its facilities which include home buyers as well as real estate agents.
Zillow Inc (NASDAQ:Z) has also captured much of the benefits of the housing recovery, with its revenue jumping 71% year over year to a record $39 million in the 2013 first quarter. The company had $3.7 million GAAP net loss for this year’s first quarter, as a result of higher operating and marketing costs following an acquisition at the end of 2012. Nonetheless, it raised its full year 2013 revenue outlook to a range of $178 million to $182 million.
Value investors, however, may find Zillow Inc (NASDAQ:Z) less attractive as it is trading 98.3 times its projected 2014 earnings. In comparison, D.R. Horton, Inc. (NYSE:DHI) has a one-year forward P/E of 12.52, while the same metric is at 11.57 for PulteGroup, Inc. (NYSE:PHM).
Congress vigil may pay
As a parting shot, the market may not have seen the plateau in the housing space, yet. The debates in the halls of Congress in the ensuing weeks can provide some ominous signs for another bull run in this sector and its allied equities.
Arturo Cuevas has no position in any stocks mentioned. The Motley Fool recommends Zillow. The Motley Fool owns shares of Zillow. Arturo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Will Printing More Green Cards Be Good for Homebuilders? originally appeared on Fool.com is written by Arturo Cuevas.
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