Our favorite real estate Youtuber Reventure Consulting has some dire data sets on their last posting (see video below).
The video got us thinking about which companies out there may have their stock prices drop significantly over the next 18 to 24 months?
We did some analysis from the top holdings of two ETFs XHB and ITB and checked their credit ratings, debt to capital ratios, percent change from 52 week high and from 52 week low.
HomeBuilders
| Company | Price | 52 Low | 52 High | LTD/Capital | Credit Rating | % from high | % from low |
| FORTUNE BRANDS HOME & SECURITY, INC. (XNYS:FBHS) | $70.05 | $56.86 | $109.23 | 54.3 | BBB+ | -35.87% | 18.83% |
| TOLL BROTHERS, INC. (XNYS:TOL) | $49.49 | $40.20 | $75.61 | 37.59 | BB+ | -34.55% | 18.78% |
| FLOOR & DECOR HOLDINGS, INC. (XNYS:FND) | $99.46 | $59.91 | $145.89 | 47.5 | BB- | -31.83% | 39.76% |
| D.R. HORTON, INC. (XNYS:DHI) | $78.61 | $59.25 | $110.45 | 17.7 | BBB | -28.83% | 24.63% |
| TOPBUILD CORP. (XNYS:BLD) | $204.98 | $150.72 | $284.07 | 46.03 | BB+ | -27.84% | 26.47% |
| THE SHERWIN-WILLIAMS COMPANY (XNYS:SHW) | $256.27 | $214.22 | $354.15 | 68.4 | BBB | -27.64% | 16.41% |
| JOHNSON CONTROLS INTERNATIONAL PLC (XNYS:JCI) | $59.00 | $45.52 | $81.77 | 30.61 | BBB+ | -27.85% | 22.85% |
| ALLEGION PUBLIC LIMITED COMPANY (XNYS:ALLE) | $108.46 | $93.05 | $148.70 | 71.87 | BBB | -27.06% | 14.21% |
| NVR, Inc. (XNYS:NVR) | $4,445.00 | $3,576.01 | $5,982.45 | 25.11 | BBB+ | -25.70% | 19.55% |
| LENNAR CORPORATION (XNYS:LEN) | $88.07 | $62.54 | $117.54 | 22.08 | BBB- | -25.07% | 28.99% |
| CARRIER GLOBAL CORPORATION (XNYS:CARR) | $44.39 | $34.12 | $58.89 | 55.79 | BBB | -24.62% | 23.14% |
| PULTEGROUP, INC. (XNYS:PHM) | $44.55 | $35.03 | $58.09 | 20.43 | BBB- | -23.31% | 21.36% |
| THE HOME DEPOT, INC. (XNYS:HD) | $327.38 | $264.51 | $420.61 | 96.5 | A | -22.17% | 19.20% |
| MASCO CORPORATION (XNYS:MAS) | $56.04 | $46.27 | $71.06 | 108.08 | BBB | -21.13% | 17.43% |
| LOWE'S COMPANIES, INC. (XNYS:LOW) | $214.12 | $170.12 | $263.31 | 122.89 | BBB+ | -18.68% | 20.55% |
The results were surprising. We had expected the companies with the highest debt ratios to be the biggest droppers but instead we found no real pattern other than the larger the firm, the lower the drop. Perhaps “too big to fail” really applies to all companies and not just banks.
We highlighted three stocks: FND; BLD; LEN that we think may be good shorting opportunities should a huge housing market correction occur. We chose these three because these stocks had the most violent swings up and down during the past 52 weeks and are the most volatile.
We will continue to research put buying opportunities to profit from a housing correction or crash and we’ll keep an eye on these three stocks to see how they react to September’s Fed interest rate hike. In the meantime stay tuned and stay solvent…
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