Group 1: Company Overview - DR Horton Inc (NYSE:DHI) is identified as one of the trending stocks this week, reflecting growing interest in the housing sector [1] - Stephanie Link, chief investment strategist at Hightower Advisors, includes DR Horton in her portfolio, anticipating a bullish housing cycle due to declining interest rates and a shortage of homes in the US [1][2] Group 2: Industry Insights - The current housing market has not experienced a cycle, yet it is still growing at a rate of 3.8%, indicating potential for significant growth when a housing cycle does occur [2] - The housing market has a multiplier effect, as homeownership leads to increased spending on furnishings and transportation, further stimulating economic activity [2]

Investment Ratings - Harvey Norman (HVN AU) is rated Overweight (OW) with a price target of A$6.50 [11][27][30] - Wesfarmers (WES AU) is rated Underweight (UW) with a price target of A$67.00 [19][30] Core Insights - Harvey Norman is expected to benefit from a recovering housing cycle, with earnings projected to turn positive in FY25 after previous declines [11][12][27] - Wesfarmers' core businesses, Bunnings and Kmart, are stable but mature, with limited growth potential and high valuation multiples already reflecting their quality [19][30] Summary by Sections Harvey Norman - The investment thesis highlights an improving outlook from a low base, with earnings declines moderating and expected sales recovery [11][27] - Key drivers include a recovering housing cycle, resilient franchisee sales momentum, and high operating leverage to sales acceleration [12][27] - Valuation remains attractive at a FY25E P/E multiple of approximately 14x, with a significant discount to broader industrials [4][27] Wesfarmers - The investment thesis indicates an Underweight rating due to high valuation multiples that do not justify current earnings growth expectations [19][30] - Key challenges include capped sales growth for Bunnings and Kmart, ongoing losses at Mt Holland in a weak lithium market, and limited organic growth opportunities [20][30] - The valuation is stretched at around 33x FY26E PER, despite recent earnings downgrades [9][30]