The real estate development companies have multi-faceted operations that range from acquisition, entitlement, development and sale of land/lots to renovation and re-lease of existing buildings. These land/lots are then sold to home-builders who build homes on them.
The steady recovery in the home-building/construction end market in 2015 and overall positive economic activity provided a strong operating backdrop for the real estate development business last year.
Generally, rising construction activity, steady job and wage growth, overall recovery in the economy and limited supply of inventory — finished lots and raw land — bode well for the real estate development industry in 2016.
While increasing demand is boosting sales, efforts to lower overhead costs, workforce reductions and the exit of non-core assets are improving profits for these real estate developers.
The Real Estate Development space currently has a Zacks Industry Rank of 36 out of more than 250 industries, suggesting it is better positioned than other sectors from this perspective.
3 Great Momentum Stocks
On this optimistic note, it will be prudent to invest in momentum stocks. A great way to narrow down such stocks is by looking at their short-term price activity as it reflects the current interest in a stock and the earnings momentum.
We have picked three Real Estate Development stocks using our Zacks style score system that promise momentum at the moment. These stocks not only have a Zacks Rank #1 (Strong Buy) or 2 (Buy) but also a momentum score of ‘A’ and ‘B.’ The stocks also rallied considerably in the past couple of months.
Forestar Group Inc. (FOR – Snapshot Report)
Austin, TX-based Forestar operates in the oil and gas and real estate sector in the U.S. Its real estate segment secures entitlements and develops infrastructure on its lands, primarily for single-family residential and mixed-use communities.
The Zacks Rank #1 stock has Momentum Style Score of A. The company has gained 40% since this February. The current year EPS estimate has moved up 29.2% over the past 30 days.
