Wall Street is entering 'the golden 6 months' for homebuilder stocks, says Fundstrat's Tom Lee
Wall Street is entering the “golden six months” for homebuilder stocks, according to one of Wall Street’s biggest bulls.
Tom Lee, managing partner and head of research at Fundstrat Global Advisors, said he recommends homebuilder equities as the U.S. stock market is about to enter a historically strong period for stocks in the home-construction sector.
“Buy homebuilders from Oct 20th to Apr 28th — ignore or avoid homebuilders from Apr 29th to Oct 19th,” he said in a Friday client note.
Since 1999, homebuilder stocks have generated an average return of 18.7% in the six months between October and April, compared with an average decline of 2.3% during the other six months of the year.
“The fundamental backdrop for homebuilders in the next six months is compelling. The Fed is cutting interest rates at a time when U.S. housing has been in a recession,” Lee wrote. “Thus, there is upside potential for revenues and earnings.”
The iShares U.S. Home Construction ETF was rising 0.8% so far in October, while the SPDR S&P Homebuilders ETF was nearly flat in the same period, according to FactSet data.