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Remember the movie “Goodfellas”? The drinks….are on….the house. Residential construction ended 2020 on a strong note. Housing starts rose 5.8% to 1.67 million annualized units in December. U.S. housing starts rose in December much more than expected to an annual rate of 1.669 million. It's now at the highest level since the financial crisis of 2007–2008. What’s even more meaningful, in this low interest rate environment – which is here to stay for a while – is that fact that limited inventory is constraining more robust growth. U.S. mortgage rates even hit a 30-year low of 2.65% compared to 3.64% one year ago. The FHA recently increased their floor and ceiling loan limits by approximately 7%, helping expand the pool of potential buyers. There is a shortage of buildable lots and people are screaming to get into houses. Whenever you have a business where demand exceeds supply, you’re living in the sweet spot. New listings are getting offers so quickly and are going straight to contract.
Yes, we are coming out of the pandemic and home sales are rising at a record pace, fueled by the generous Fed printing money with its soft monetary stance and lower mortgage rates. Demand for new homes is improving in lower density markets, including small metro areas, rural markets and large metro exurbs, as people seek larger homes to work from home during the pandemic. Homebuilders are focused on growing demand for entry-level homes and addressing the need for lower-priced homes.
Welcome to the homebuilding BOOM of the 21st Century. And speaking of Century, today I bought stock in Century Communities, Inc (CCS) at a price of 59.02. I will sell it in 4 to 6 weeks at 68.17. Here’s why I love CCS:
First of all, look at this amazing chart:
This stock is up 59% in the last 12 months and yet its PE is still only 9.6. Growth plus value….I like it!
Century Communities, Inc., together with its subsidiaries, engages in the design, development, construction, marketing, and sale of single-family attached and detached homes. It is also involved in the entitlement and development of the underlying land; and provision of mortgage, title, and insurance services to its home buyers. The company sells homes through its sales representatives, as well as through independent real estate brokers in 17 states in the United States.
They are just crushing it. In 2020, CCS achieved multiple milestones, including their 18th consecutive year of profitability, $3.2 billion in total revenues, a 25% increase; to 10,822 net new contracts, a 38% increase; and 9,453 home deliveries, an 18% increase.
They have consistently achieved double-digit revenue and delivery growth, reflecting the power of their business model and the appeal of their geographically diverse footprint. Last quarter, they generated record home sales revenues of nearly $950 million, a 22% increase, while increasing home deliveries by 14% to a company record 2,826 homes. The sales pace accelerated through the end of 2020 and into the beginning of 2021, with net new contracts for December increasing 54% and January increasing 77%. They also made significant progress in growing their backlog.
Net income for the quarter and year also increased 72% and 82%, respectively, to $92 million and $206 million. Adjusted homebuilding gross margin percentage increased sequentially 300 basis points to 23%, primarily due to improved home price appreciation across their markets.
The Phoenix is rising. Century plans to break ground across multiple planned communities consisting of over 1,700 home sites which will diversify Century's offerings in this attractive, high-potential market where new home demand is at an all-time high. In 2020, Phoenix was a top 10 U.S. city for inbound growth. Building spec homes in a high demand market is really smart. The construction process is typically faster, more efficient and less prone to closing delays. The time frame between sale and delivery can be materially shortened to maximize margin potential. Market conditions will remain favorable into the spring selling season and throughout the balance of the year. Looking back, they didn't see a slowdown at the end of the year that is pretty typical. They sold completely through the holidays, and it just continued on after the New Year.
Here’s a trend worth looking at:
Revenues Earnings
2016 $ 994 $ 50
2017 $1424 $ 50
2018 $2147 $ 96
2019 $2536 $113
2020 $3161 $206
The numbers speak for themselves…and…the drinks….are on….the house!
Here’s what the boss, Dale Francescon, had to say:
“Our impressive performance is compelling evidence of the power of our business model, as well as the strength of our entire team and our ability to overcome the unprecedented challenges of the past year. We're even more excited for what lies ahead. We are in 2021 with a great sense of opportunity and looking into the future, remain confident in our ability to build on our success and achieve a long term vision. We are better situated than ever before to expand our scale and scope, accelerate growth and generate expanded profitability. Before the full effects of the pandemic were felt last year, housing demand was solid and picking up pace. At that time, there were already multiple demand drivers and industry tailwinds at play. We believe these trends are real and have considerable staying power. The primary factor is, and continues to be, record low interest rates.”
With the amount of money I make on this stock trade, I’ll be able to buy a house in Phoenix! Bring me your finest meats and cheeses!
$$$MR. MARKET$$$
www.mrmarketishuge.com
Yes, we are coming out of the pandemic and home sales are rising at a record pace, fueled by the generous Fed printing money with its soft monetary stance and lower mortgage rates. Demand for new homes is improving in lower density markets, including small metro areas, rural markets and large metro exurbs, as people seek larger homes to work from home during the pandemic. Homebuilders are focused on growing demand for entry-level homes and addressing the need for lower-priced homes.
Welcome to the homebuilding BOOM of the 21st Century. And speaking of Century, today I bought stock in Century Communities, Inc (CCS) at a price of 59.02. I will sell it in 4 to 6 weeks at 68.17. Here’s why I love CCS:
First of all, look at this amazing chart:
This stock is up 59% in the last 12 months and yet its PE is still only 9.6. Growth plus value….I like it!
Century Communities, Inc., together with its subsidiaries, engages in the design, development, construction, marketing, and sale of single-family attached and detached homes. It is also involved in the entitlement and development of the underlying land; and provision of mortgage, title, and insurance services to its home buyers. The company sells homes through its sales representatives, as well as through independent real estate brokers in 17 states in the United States.
They are just crushing it. In 2020, CCS achieved multiple milestones, including their 18th consecutive year of profitability, $3.2 billion in total revenues, a 25% increase; to 10,822 net new contracts, a 38% increase; and 9,453 home deliveries, an 18% increase.
They have consistently achieved double-digit revenue and delivery growth, reflecting the power of their business model and the appeal of their geographically diverse footprint. Last quarter, they generated record home sales revenues of nearly $950 million, a 22% increase, while increasing home deliveries by 14% to a company record 2,826 homes. The sales pace accelerated through the end of 2020 and into the beginning of 2021, with net new contracts for December increasing 54% and January increasing 77%. They also made significant progress in growing their backlog.
Net income for the quarter and year also increased 72% and 82%, respectively, to $92 million and $206 million. Adjusted homebuilding gross margin percentage increased sequentially 300 basis points to 23%, primarily due to improved home price appreciation across their markets.
The Phoenix is rising. Century plans to break ground across multiple planned communities consisting of over 1,700 home sites which will diversify Century's offerings in this attractive, high-potential market where new home demand is at an all-time high. In 2020, Phoenix was a top 10 U.S. city for inbound growth. Building spec homes in a high demand market is really smart. The construction process is typically faster, more efficient and less prone to closing delays. The time frame between sale and delivery can be materially shortened to maximize margin potential. Market conditions will remain favorable into the spring selling season and throughout the balance of the year. Looking back, they didn't see a slowdown at the end of the year that is pretty typical. They sold completely through the holidays, and it just continued on after the New Year.
Here’s a trend worth looking at:
Revenues Earnings
2016 $ 994 $ 50
2017 $1424 $ 50
2018 $2147 $ 96
2019 $2536 $113
2020 $3161 $206
The numbers speak for themselves…and…the drinks….are on….the house!
Here’s what the boss, Dale Francescon, had to say:
“Our impressive performance is compelling evidence of the power of our business model, as well as the strength of our entire team and our ability to overcome the unprecedented challenges of the past year. We're even more excited for what lies ahead. We are in 2021 with a great sense of opportunity and looking into the future, remain confident in our ability to build on our success and achieve a long term vision. We are better situated than ever before to expand our scale and scope, accelerate growth and generate expanded profitability. Before the full effects of the pandemic were felt last year, housing demand was solid and picking up pace. At that time, there were already multiple demand drivers and industry tailwinds at play. We believe these trends are real and have considerable staying power. The primary factor is, and continues to be, record low interest rates.”
With the amount of money I make on this stock trade, I’ll be able to buy a house in Phoenix! Bring me your finest meats and cheeses!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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