As US home sales continue to rise and shares of the wholesale mortgage issuer UWM Holdings Corporation (NYSE:UWMC) Trading at a very reasonable valuation, UWMC stock seems like a good buy for value investors and income investors at this point.
Most importantly, US home sales growth is unlikely to slow much anytime soon.
According to Barron’s, UWM ” works with independent brokers to drive borrowers to their loans.
Door-to-door sales are likely to stay hot
Some of the main factors behind the real estate boom include the trend towards working from home, rapidly increasing crime in cities, very low interest rates, strong differentiation in the tax burden of different states and the closure of businesses. public schools in some areas.
The real estate boom is so strong that in January, the national S&P CoreLogic Case-Shiller index increased from the highest year over year since 2006. As we know, this was at the heart of the last real estate boom in the United States. But unlike the last housing wave, which was sparked by insanely easy money, this one has a solid foundation.
In addition, a recent survey of Americans “showed that more consumers intended to buy homes … in the next six months” amid growing consumer confidence.
The factors will not go away
And while these fundamental drivers are likely to erode over the next year, they will not go away. Many Americans will return to their offices, but there will be tens of millions more employees working from home than before the pandemic. Crime will decrease, but will likely continue to register significant increases year over year. Interest rates will go up, but with the help of the Fed and anti-inflation tax hikes, rates will likely stay historically low.
Changes in federal tax laws – the removal of the SALT deduction cap – will narrow the state tax gap, but these measures will not come close to eliminating the disparities. Finally, schools will reopen, but many parents will have lost faith in school districts that have kept their doors closed for far too long.
Meanwhile, the wages of middle-class and wealthy millennials will continue to rise, increasing the demand for single-family homes as well.
So, overall, the real estate boom will subside considerably. But the growth of the housing market should continue to be quite strong. This, in turn, is expected to boost UWM Holdings’ results, thereby increasing UWMC’s stock.
February 16, German Bank analyst Ashish Sabadra started UWMC stock coverage with a price target of $ 12 and a “buy”.
“Robust loan production, along with industry-leading earning margins, provide solid profitability, and strong cash generation and a favorable capital allocation to shareholders make this an attractive value proposition,” Sabadra wrote. , according to Seeking Alpha.
Other positives about UWM include its technology and growing market share, the analyst said. Meanwhile, the three analysts covering the stocks have an average price target on UWMC stock of $ 10.67, well above its current price of $ 7.83.
And in his chronicle published on March 26, another InvestorPlace contributor David Moadel wrote that UWM “appears to have solid tax statistics and innovative product ideas.” Moadel noted that in the fourth quarter of last year, the value of the company’s loan origination jumped 71% year-over-year to a record $ 54.7 billion. It’s a very impressive YOY jump.
The result on the UWMC stock
Despite the company’s extremely strong fourth quarter growth and optimistic macroeconomic outlook, UWMC stock is posting a forward price-to-earnings ratio of just 5.9x. It’s extremely inexpensive in today’s market.
In addition, the mortgage issuer has a superb 5% dividend yield, value investors will appreciate the low valuation of UWMC shares, while income investors will be very satisfied with its high dividend yield. These investors should buy the shares.
At the time of publication, Larry Ramer had (directly or indirectly) no position on the titles mentioned in this article.
Larry Ramer has researched and written articles on US equities for 13 years. He was employed by The Fly and Israel’s largest business newspaper, Globes. Larry started writing articles for InvestorPlace in 2015. Some of his highly successful contrarian picks include GE, Solar Stocks, and Snap. You can reach him on StockTwits at @larryramer.
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