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Four Real Estate Stocks That Could Outperform in a Stagflationary Environment

OTC Stock Review - News Commentary


EXCERPT from ATLANTA, April 07, 2022 (GLOBE NEWSWIRE) -- The 1970s were a simpler time, but they were also an era of economic struggle, which included the effects of stagflation on the U.S. economy as the price of crude oil doubled from 1973 to 1975. Stagflation is what happens when the economy is experiencing both economic stagnation – stalling or falling output – and high inflation. To make things worse, the struggling economy will drive up unemployment. Runaway inflation caused by increased government spending, dependence on foreign oil, and slowing economic growth have investors concerned about 1970s-era stagflation returning in 2022. The last time stagflation was a problem, real estate was a top-performing sector in the market, which leads us to believe it could be a great place to invest in the current environment. Homebuilding stocks are cheap by traditional valuation models, so if you like to hope for the best and plan for the worst, it might be worth adding a few to your portfolio.


In 2021, real estate developers and home builders were plagued by supply chain issues, persistent labor market tightness and lumber price fluctuations. Add in the current environment of rising interest rates and the shares of many home builders are trading at valuations that are at the low-end of the historical range. Home sales remain strong, and homebuilders are showing increased profits. If low P/E ratios and double-digit earnings growth over the next few years are not enough to pique your interest, Harvard's Joint Center for Housing Studies projects that annual household growth from 2022 to 2028 will average 1.2 million households per year, which is 20% higher than the prior five-year average.


Four real estate development and home builder stocks investors will want to consider are D.R. Horton, Inc. (DHI), Community Redevelopment (OTC: CRDV), Beazer Homes (NYSE: BZH), and PulteGroup, Inc. (NYSE: PHM).

D.R. Horton, Inc. (NYSE: DHI) is known as America’s Builder. It has been the largest homebuilder by volume in the United States since 2002. With operations in 102 markets in 32 states across the U.S. D.R. Horton closed on 81,622 homes in the twelve-month period ended December 31, 2021. Its diverse brand portfolio includes D.R. Horton, Emerald Homes, Express Homes and Freedom Homes with sales prices ranging from $150,000 to over $1,000,000. D.R. Horton also provides mortgage financing, title services and insurance agency services for its homebuyers, and constructs and sells both single-family and multi-family rental properties. It is the majority-owner of Forestar Group Inc., a publicly traded national residential lot development company.


D.R. Horton will release financial results for its second quarter ended March 31, 2022 on Tuesday, April 26, 2022 before the market opens. The company showed an increase in home building revenue for the first quarter of fiscal 2022 of 17% to $6.7 billion from $5.7 billion in the same quarter of fiscal 2021. Homes closed in the quarter decreased 2% to 18,396 homes compared to 18,739 homes closed in the same quarter of fiscal 2021, but net income per common share for the first fiscal quarter ended December 31, 2021 increased 48% to $3.17 per diluted share compared to $2.14 per diluted share in the same quarter of fiscal 2021. Consolidated pre-tax income increased 45% to $1.5 billion on a 19% increase in revenues to $7.1 billion. D.R. Horton also repurchased 2.7 million shares of common stock for $278.2 million. For more information on D.R. Horton please visit www.drhorton.com.


Community Redevelopment Inc. (OTC: CRDV) Community Redevelopment Inc. (OTC: CRDV) is a full-service real estate company with a management team that has extensive experience in acquiring, developing, constructing, and managing high-quality multifamily, and retail properties in attractive markets throughout the Mid-Atlantic and Southeastern United States, as well as extensive capital markets experience. Community Redevelopment filed its 10-K for the Fiscal Year ending December 31, 2021 showing Total Assets over $18.47 million dollars and over $1 million in cash. This increase in Total Assets was attributed to an acquisition of a portfolio of membership interests in six commercial retail, multifamily and mixed-use properties in the Washington, D.C. Metro area for shares of the Company’s stock. The properties consist of stores, apartment buildings, and centers, which are either owned or held under long-term operating leases.


Community Redevelopment's acquisition strategy is based on acquiring quality, well positioned real estate in markets with robust growth and demographics, anchored by strong tenants. By developing real estate in multicultural and ethnically diverse urban communities, as well as mainstream America. The company plans to provide sustainable, long-term value to investors as it strives to provide opportunities to improve neighborhoods in urban and suburban markets. Community Redevelopment offers investors an opportunity to participate in the growth and upside of trends in the real estate market by being a shareholder. As an owner of shares of common stock, investors experience significantly increased liquidity as compared to owning real estate. For more information on Community Redevelopment please visit www.comredev.com.


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