LEGH - Beazer Homes USA: Time For An Upgrade

2024-06-24 12:19:35 ET

Summary

• Beazer Homes USA stock has surged 89.5% since July 2022, outperforming the S&P 500.
• Despite mixed financial performance, the company is showing improvements in closings, backlog, and net new orders.
• With the stock trading at a low valuation and potential catalysts on the horizon, an upgrade to a 'strong buy' is warranted.

Nearly two years ago, in July of 2022, I wrote an article discussing the investment worthiness of homebuilder Beazer Homes USA ( BZH ). At that time, I acknowledged that investors were right to be wary of the housing market. Rising interest rates and high inflation do not bode well for housing demand. But even in spite of that, shares of the company looked attractively priced, so much so that I could not help but to rate the company a 'buy'. This was in spite of the fact that the firm was already seeing net new orders decline year over year and its cancellation rate notch up. Backlog was even starting to fall relative to what it had been the year prior....

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