LGIH - LGI Homes: Short-Term Uncertainty Long-Term Optimism

2024-04-17 05:50:53 ET

Summary

• LGI Homes has experienced relatively material share price volatility over the past 12 months as a result of broader macro trends like interest rates.
• While sales are subject to the negative effects of such macro factors, there's a long-term growth opportunity for LGI through increased absorption rates and community count.
• I think LGIH could reasonably be in the mid-to-upper-$100 per share territory, particularly considering a likely release of inventory driving increased cash flow.

Introduction

LGI Homes ( LGIH ) has seen a relatively good amount of share price volatility over the past 12 months going from low-$100/share to over $130/share down to mid-$80/share, back up to over $130/share, and now down to mid-$90/share. I can't say I'm totally surprised - my casual observations have been that homebuilders are more volatile than general, trading largely with "macro" factors like interest rates....

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