5 Best Very Cheap Stocks To Buy Now According To Hedge Funds

3. D.R. Horton, Inc. (NYSE:DHI)

Number of Hedge Fund Holders: 64

PE Ratio: 9.19

D.R. Horton, Inc. (NYSE:DHI) is a Texas-based home construction company that is engaged in purchasing and developing land, and constructing, and selling different types of houses and structures.

On November 8, BTIG increased the price target on D.R. Horton, Inc. (NYSE:DHI)’s stock to $178 from $164 and maintained a Buy rating. The firm believes that the company will outperform its competitors for a couple of reasons, including its position in local market share, the efficiency of its production business model, and its low-cost entry-level-home focus.

On November 7, D.R. Horton, Inc. (NYSE:DHI) posted Q4 GAAP EPS of $4.45, which beat the estimates by $0.52, while the revenue climbed 19.3% year-over-year (YoY) to $10.5 billion, surpassing the estimates by $480 million.

D.R. Horton, Inc. (NYSE:DHI) was mentioned in Baron Funds’ second quarter 2023 investor letter. Here is what it said:

“Our investments in homebuilder companies – Toll Brothers, Inc., Lennar Corporation, and D.R. Horton, Inc. (NYSE:DHI) – performed well in the first six months of 2023. The share price of Toll Brothers increased nearly 60% and the shares prices of Lennar and D.R. Horton each gained more than 35%.

Year-to-date, each company has witnessed a meaningful uptick in demand to buy homes:

Home buyers continue to come off the sidelines and buy homes despite 30-year mortgage rates remaining in the 6.5% to 7.0% range. Several factors are contributing to the recent strength, including pent-up demand to buy homes and fears that mortgage rates could move higher. • The sticker shock of rapidly rising mortgage rates appears to have cooled down. Homebuilders have made homes more affordable to prospective home purchasers by offering mortgage rate buydowns to the mid-5% mortgage rate range while maintaining strong profitability margins. • A dearth of inventory in the existing home market and an overall housing supply shortage is driving home buyers to “stretch their wallet” due to fears that they could miss the opportunity to buy a home.

We remain optimistic about the long-term potential for the Fund’s investments in Toll Brothers, Lennar, and D.R. Horton for several reasons…” (Click here to read the full text)