Company Overview - D.R. Horton, Inc. (NYSE:DHI) is one of the largest homebuilding companies in America [2] - The company's shares have increased by 13.6% over the past year, making it one of the better-performing stocks in its sector [2] Recent Downgrades - Wells Fargo downgraded D.R. Horton from Overweight to Equal Weight and reduced the share price target from $180 to $155, citing inventory buildup and discounting in the industry [2] - Citizens also downgraded D.R. Horton in January, changing its rating from Market Outperform to Market Perform, indicating potential inventory clearing in 2026 [2] Market Conditions - The pessimism surrounding homebuilding stocks, including D.R. Horton, is linked to high interest rates, which are affecting the affordability of starter homes [3] - Research firms, including Wells Fargo and UBS, have recently downgraded multiple homebuilding stocks, indicating a broader concern in the housing market [3]

Core Viewpoint - The article discusses the identification of 10 undervalued cyclical stocks for investment, emphasizing the potential for growth in the consumer cyclical sector and the importance of hedge fund interest in these stocks [1][5][6]. Market and Economic Outlook - Alan McKnight from Regions Wealth Management indicates that the consumer sector remains strong, with earnings performing well, suggesting a healthy market and economy [2]. - Richard Bernstein highlights that 2026 may present different investment opportunities, recommending dividend-paying stocks and international diversification due to the outperformance of international markets compared to the US market in 2025 [2][3]. Stock Selection Methodology - The list of 10 undervalued cyclical stocks was curated using the Finviz stock screener, Seeking Alpha, and Insider Monkey's Q3 2025 database, focusing on consumer cyclical stocks with a forward P/E ratio under 15 [5]. - Stocks were ranked based on the number of hedge fund holders, as research indicates that mimicking top hedge fund picks can lead to market outperformance [6]. Individual Stock Analysis - **Trip.com Group Limited (NASDAQ:TCOM)** - Forward P/E Ratio: 11.77, with 37 hedge fund holders - The stock has gained over 22% in the past 6 months, with Wall Street projecting a 16% upside [7]. - Recently partnered with Galaxy Asia Car Rental to enhance visibility in Malaysia, a market experiencing triple-digit growth year-over-year [8][9]. - The partnership aims to integrate global planning with local execution, capitalizing on rising regional demand [9][10]. - **PulteGroup, Inc. (NYSE:PHM)** - Forward P/E Ratio: 10.84, with 42 hedge fund holders - Wall Street has mixed opinions, with RBC Capital maintaining a Hold rating and lowering the price target from $112 to $111, while Citizens maintains a Buy rating with a $145 price target [11][12]. - RBC Capital expresses caution regarding the housing sector due to affordability challenges, while Citizens highlights the company's focus on move-up and adult buyers, which may mitigate the impact of mortgage rate volatility [12][13]. - PulteGroup generates approximately two-thirds of its annual sales from these buyer segments, providing a competitive edge [13][14].

Core Viewpoint - M/I Homes and D.R. Horton are experiencing significant growth in home sales, driven by strong demand and favorable market conditions [1] Group 1: Company Performance - M/I Homes reported a 15% increase in home sales year-over-year, reflecting robust demand in the housing market [1] - D.R. Horton achieved a 20% rise in net sales for the last quarter, indicating strong consumer interest and effective sales strategies [1] Group 2: Market Trends - The housing market is showing resilience, with low mortgage rates and a limited supply of homes contributing to increased sales [1] - Both companies are expanding their operations in key markets, capitalizing on the ongoing demand for new homes [1]

Core Insights - Persimmon reported a strong performance in 2025, with a 12% growth in completions and expects underlying profit before tax at the upper end of expectations, driven by outlet expansion and a robust fourth quarter [5][7][21] Sales and Pricing - Forward sales increased by 2% in value terms, with private forward sales up 4%, although PRS forward sales value declined due to fourth-quarter disruptions [1] - Average selling prices (ASP) rose, with private ASP up 5% and affordable ASP up 4%, leading to a blended ASP growth of 4% overall [3][7] - Pricing incentives have remained stable at around 4% to 5% for the last 18 months, with regional variations noted [2] Completions and Growth - Completions growth was driven by a mix shift across channels, with affordable completions up 30%, PRS up 20%, and private completions up 6% [4] - The company expects around 12,000 completions for FY2026, although growth is anticipated to slow compared to 2025 [10][8] Market Conditions and Land Opportunities - Management highlighted an excellent pipeline of land opportunities, with improved access attributed to better partnerships and brand rehabilitation [12][11] - Recent government progress on planning and infrastructure is seen as positive, although real-world impediments remain [11] Cost Pressures and Margin Outlook - Key cost headwinds include a significant increase in landfill tax and the upcoming Building Safety Levy, which will impact cash costs [6][14] - Despite these pressures, the company expects margin progression in 2026 to be similar to that of 2025 [17] Remediation and Capital Allocation - The company is nearing completion of remediation works, with 90% of known developments either completed or contracted [18][19] - Management anticipates a reduction in remediation provisions over time, although the process may be uneven [19][20]

Group 1 - AtaiBeckley Inc. (ATAI) is a biopharmaceutical company with a Zacks Consensus Estimate for its current year earnings revised downward by 33.4% over the last 60 days [1] - Braemar Hotels & Resorts Inc. (BHR) is a hotel real estate investment trust, and its Zacks Consensus Estimate for current year earnings has been revised downward by 43.2% over the last 60 days [1] - Beazer Homes USA, Inc. (BZH) is a homebuilder company, with its Zacks Consensus Estimate for current year earnings revised downward by 19.2% over the last 60 days [2]

Economic Outlook - ARK Invest CEO Cathie Wood forecasts a "Goldilocks" economic scenario in 2026, predicting real GDP growth nearing 5% alongside falling inflation, potentially leading to deflation, driven by an AI-led productivity boom [1][2] - Wood argues that the U.S. economy is emerging from a three-year "rolling recession" that impacted housing and manufacturing, with real GDP growth already exceeding 4% in late 2025 [2] Inflation and Productivity - Wood highlights declining oil prices, which may decrease by another 20-25%, and falling unit labor costs as indicators that inflation could surprise to the downside, possibly turning negative [3] - She asserts that productivity-driven growth is associated with falling inflation, contrasting with the consensus view that rapid growth leads to inflation [3] Housing Market - Wood expresses optimism about a housing recovery, supported by a $200 billion mortgage bond purchase program announced by President Trump aimed at lowering interest rates [3] - Homebuilders like Lennar Corp. and KB Home are reducing prices to clear inventory, which, combined with improving affordability and lower rates, is expected to drive a significant rebound in residential real estate [4] Asset Allocation - Wood differentiates between Gold and Bitcoin, suggesting that Gold prices may have reached "irrational exuberance" relative to money supply, while advocating for Bitcoin as the "ultimate diversifier" [5] - She presents data indicating Bitcoin's correlation to traditional asset classes remains near zero, arguing that asset allocators have a "fiduciary duty" to consider crypto assets for optimizing portfolio risk and returns [6] Stock Market Performance - The S&P 500 and Dow Jones indices have seen year-to-date gains of 1.44% and 3.09%, respectively, while the Nasdaq 100 index has risen by 1.03% [7] - The SPDR S&P 500 ETF Trust and Invesco QQQ Trust ETF closed higher, with SPY up 0.16% at $695.16 and QQQ advancing 0.083% to $627.17 [7]

Core Insights - Toll Brothers, Inc. announced the grand opening of two new model homes at Woodinville Square, a luxury townhome community in Woodinville, Washington, on January 17, 2026 [1][4] - The community features luxury three-bedroom townhomes with 3.5 baths, ranging from 1,510 to over 2,017 square feet, with prices starting from the mid-$800,000s [2][4] Company Overview - Toll Brothers, Inc. is the nation's leading builder of luxury homes, founded in 1967 and publicly traded since 1986 under the symbol "TOL" [7] - The company operates in over 60 markets across the United States, catering to various buyer segments including first-time, move-up, active-adult, and second-home buyers [7] Community Features - Woodinville Square offers a prime location near the new Schoolhouse District, wine-tasting rooms, dining options, and direct access to the 42-mile Eastrail Trail system [4] - The community is served by the highly rated Northshore School District, which includes Hollywood Hill Elementary, Leota Middle School, and Woodinville High School [4] Customer Experience - Home shoppers can personalize their homes at the Toll Brothers Design Studio, which provides a wide array of selections with the help of professional Design Consultants [6] - The Sales Center is located at 13301 NE 175 Place in Woodinville, with additional information available through their website [6]

Core Insights - Toll Brothers, Inc. announces the grand opening of the Brasada and Alderbrook model homes at Camas Meadows Crossing, a new luxury townhome community in Camas, Washington, on January 17, 2026 [1][2] Company Overview - Toll Brothers, Inc. is the nation's leading builder of luxury homes, founded in 1967 and publicly traded since 1986 under the symbol "TOL" [12] - The company operates in over 60 markets across the United States, catering to various buyer segments including first-time, move-up, active-adult, and second-home buyers [12] Community Features - Camas Meadows Crossing features three-story townhomes with modern architecture and open-concept floor plans, ranging from 1,500 to 2,481 square feet, with 3 to 5 bedrooms and attached 2-car garages, starting from the upper $500,000s [2][4] - The community is located in the esteemed Camas School District, across from Camas Meadows Golf Club, and offers easy access to Lacamas Lake and downtown Camas [2][9] Event Details - The grand opening event will take place on January 17 from 12 p.m. to 3 p.m. at 3839 NW 65th Ave in Camas, where home shoppers can tour the new model homes and enjoy light refreshments [1][4] Design and Personalization - Home shoppers can personalize their homes at the Toll Brothers Design Studio, which offers a wide array of selections with the assistance of professional Design Consultants [4] Additional Offerings - Quick move-in homes with curated fixtures and finishes selected by Toll Brothers design professionals will also be available for tour during the event, catering to those seeking a move-in ready option [8] Lifestyle and Location Benefits - The community offers low-maintenance living with tax advantages of Washington state, proximity to dining and boutique shopping in downtown Camas and Oregon, and recreational opportunities including the Lacamas Heritage Trail and Lacamas Lake Park [9]

Core Viewpoint - The housing market is currently challenging for Toll Brothers, Inc. due to weak affordability, leading to a prolonged period of lower housing sales and a decline in the company's backlog [1] Company Summary - Toll Brothers has experienced a decrease in housing sales attributed to affordability issues, which has also impacted its high price point [1] - The company's backlog has fallen, indicating a potential slowdown in future sales and revenue generation [1] Industry Summary - The overall housing market is facing difficulties, particularly in terms of affordability, which is affecting sales across the sector [1]

Company Overview - Toll Brothers, Inc. (TOL) is facing challenges in the housing market due to weak affordability, leading to a prolonged period of lower housing sales [1] - The company's high price point has been negatively impacted as its backlog has fallen [1] Market Conditions - The housing market is currently characterized by reduced affordability, which is affecting overall sales and demand [1] - The decline in backlog indicates a potential slowdown in future revenue generation for Toll Brothers [1]