The Zacks Analyst Blog Highlights: PulteGroup, M.D.C. Holdings, D.R. Horton, Forterra And KB Home
Zacks Investment Research | Feb 10, 2020 10:36PM ET
For Immediate Release
Chicago, IL – February 11, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: PulteGroup Inc. (NYSE:PHM) , M.D.C. Holdings Inc. (NYSE:MDC) , D.R. Horton Inc. (NYSE:DHI) , Forterra Inc. (NASDAQ:FRTA) and KB Home (NYSE:KBH) .
Here are highlights from Monday’s Analyst Blog:
January Jobs Data Validates Strength in Labor Market: 5 Picks
The non-farm payroll data for January has reaffirmed the robustness of the U.S. labor market barring some minor fluctuations. Notably, the labor market has been the best driving force for the historically longest expansion of the U.S. economy, which is growing for more than eleven and half years. Notably, the steady growth of labor demand has led to increasing wage gains and a historically low-level of unemployment rate.
Non-farm Payrolls Outpace Expectations
On Feb 7, the Department of Labor reported that the U.S. non-farm job addition came in at 225,000 surpassing the consensus estimate of 162,000. Moreover, November’s estimates were revised upward by 5,000 to 261,000, while December’s estimates rose 2,000 to 147,000. Consequently, the economy added more than 211,000 jobs on average in the past three months.
The unemployment rate increased slightly from 3.5% to 3.6%, primarily due to 0.2% increase in labor force participation rate, which stood at 63.4% in January — its highest level since June 2013. Moreover, the average hourly wage rate grew 0.3% in January, in line with the consensus estimates. Average wage rate improved 3.1% year over year, reflecting the 18th successive month of 3% or above wage rate growth.
In another report on Feb 6, the Department of Labor reported that non-farm productivity in fourth-quarter 2019 increased 1.4% on an annualized rate year over year after declining 0.2% in third-quarter 2019, which marked its biggest drop since the fourth quarter of 2015. The labor cost grew 2% in 2019 compared with 1.8% in 2018. Despite a tight labor market, inflation is expected to remain below Fed’s 2% target level.
Sectors That Added Most Jobs
In January 2019, the education and healthcare services added 72,000. This was followed by the construction, leisure and hospitality, transportation and warehousing, professional and business services, government, wholesale trade and information sector adding 44,000, 36,000, 28,000, 21,000, 19,000, 8,400 and 5,000, respectively. Meanwhile, manufacturing, retail, utilities and financial services lost 12,000, 8,300, 1,400 and 1,000 jobs.
Among the sectors that gained jobs in January, the construction sector is the most important one. The U.S. housing market witnessed an uptick in second-half 2019, due to the Federal Reserve’s three consecutive interest rates cuts from July to September. With interest rates low, mortgage rates also remain low, which in turn helps consumers to borrow more easily. Notably, the housing market constitutes around 3% of the U.S. GDP.
The Association of Equipment Manufacturers has estimated that the U.S. construction market will grow 1.5-2% between the period of 2020 to 2025. Consultancy firm Deloitte highlighted that the growing global trend in infrastructure upgrades and smart city initiatives will heavily benefit construction companies.
Our Top Picks
At this stage, it will be prudent to invest in stocks from those sectors, which added most jobs in January and have strong growth potential. We narrowed down our search to five construction stocks each of which carries a Zacks Rank #1 (Strong Buy) and popped in the past three months. You can see Original post
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