THE MONTHLY RESEARCH CONFERENCE CALL HOUSING: RISKS & OPPORTUNITIES IN A DECLINING RATE ENVIRONMENT

Transcription

1 THE MONTHLY RESEARCH CONFERENCE CALL HOUSING: RISKS & OPPORTUNITIES IN A DECLINING RATE ENVIRONMENT MODERATORS Jim Kelleher, CFA Director of Research John M. Eade Argus President Chris Graja, CFA Senior Consumer Discretionary Analyst Wednesday, April 3, :00 a.m. ET 61 Broadway NYC, N.Y Telephone: (212)

2 WHAT S NEW AT ARGUS APRIL 2019 New Names Added to Argus Analyst Coverage Universe Linde plc - global industrial gases company L Oreal - personal care products industry leader Lear Corp. - seating & electrical systems for automotive OEMs Raymond James - diversified financial services provider CBOE Global Holdings - worldwide exchange operator in options, futures, etc. Find it on website: home page, top, search companies Analyst Quick Notes Weekly Stock List: Millennial generation portfolio stocks Weekly Stock List: Industrial ideas Weekly Stock List: Weak performers in a strong market Find it on website: home page, top center Weekly Market Podcast John Eade reviews recent market performance and the 2019 outlook 2019 Investment Themes podcast series Find it on website: home page, bottom left - 2 -

3 MACRO FORECASTS REAL GDP W/FORECASTS (%) TREASURY YIELD CURVE (%) Year-Ago Current 6-Month Forecast Source: Bureau of Economic Analysis, Argus Research Corp. -8 '00 '02 ' E Mo bill 2-Yr Note 5-Yr Note 10-Yr Bond 30-Yr Bond S&P 500 QUARTERLY EARNINGS GROWTH MARKET SECTOR DISTRIBUTION - PERCENT OF S&P % 80% 60% 40% 20% 0% -20% -40% '00 '01 '02 '03 '04 '05 06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 17E 18E 19E 20E Sectors in Green are Recommended Overweight; Blue are Marketweight; Red are Underweight Communication Services Basic Materials Utilities Consumer Discretionary Industrial Consumer Staples Energy Healthcare Real Estate Financial Services Technology 0% 5% 10% 15% 20% 25% - 3 -

4 MARKET PERFORMANCE DATA AS MARCH 31, 2019 MAJOR INDEX SECTOR Nasdaq Composite Growth Stocks (Wilshire Large Growth) Russell 2000 S&P 500 DJIA Value Stocks (Wilshire Large Value) Lehman US Aggregate Bond Index 0% 5% 10% 15% 20% Technology Real Estate Industrials Energy Consumer Discretionary Communication Services Consumer Staples Utilities Materials Financials Health Care 0% 5% 10% 15% 20% GLOBAL EQUITY MARKETS China US DJ World Index Canada Russia Euro Zone UK Brazil Japan India Mexico 0% 5% 10% 15% 20% - 4 -

5 HOUSING 2019 What s going on with housing stocks? End of the cycle? A pause in the cycle? The start of a new cycle? What is our multi-year thesis? Will I be able to make 360 monthly payments? Do I see my home as a cost or an investment? What are the risks? Affordability Margins Late in the cycle - 5 -

6 HOUSING-RELATED RECOMMENDATIONS Home Depot (HD) $220 target price. Lowe s (LOW) $120 target price. Lennar (LEN) $60 target price. D.R. Horton (DHI) $47 target price. Williams-Sonoma (WSM) $70 target price. Masco (MAS) $44 target price

7 INDUSTRIAL COMPANIES WITH EXPOSURE TO HOUSING INDUSTRY Deere & Co. Inc. (DE) Target price = $175 Emerson Electric (EMR) Target price = $75 Ingersoll-Rand (IR) Target price = $114 United Rentals Inc. (URI) Target price = $140 United Technologies Corp. (UTX) Target price = $

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