by Glenn Rogers, contributing editor Gordon Pape's Internet Wealth Builder
For the first time since the 2008 housing collapse, we see signs of hope and an investment opportunity in the sector.
Consumer sentiment is improving. And affordability against median income is at one of its lowest points in history. All this has begun to move the markets. Here's a look at a variety of favorite stocks and ETFs to play this trend.
Some cautionary thoughts come to mind before I get to my recommendations. First, I believe the overall market is due for a fairly significant pullback. Second, the homebuilding stocks -- up about 85% since last October -- may pull back even more given the recent run they've had.
Once this happens, then I think you can begin to build positions. If you just can't wait or if I'm wrong you can take small positions now but no more than about 25% of your final target position. But over the longer term, 24 months or so, stocks in this area will continue to improve.
I am recommending SPDR Homebuilders ETF
). This is an interesting basket of not only the major home builders like Lennar
), D.R. Horton
), and PulteGroup
It also holds a selection of related companies such as Home Depot
), Whirlpool Corp
), TempurPedic International
), and Pier 1 Imports
The units are up just over 14% over the past year compared to 5.5% for the S&P 500. Total holdings include 27 firms with roughly 30% of its assets in homebuilders and the rest in manufacturers and providers of home furnishings.
Another one that is worth a look is the iShares Dow Jones Home Construction ETF
). Two-thirds of the total holdings of this fund are homebuilders.