Is Lennar A Buy Here?


With shares of Lennar (NYSE:LEN) trading around $35, is the stock an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze it with the relevant sections of our Cheat Sheet investing framework:

T = Trends for a Stock’s Movement

Lennar is a home builder and a provider of financial services as well as an investor and manager of funds that invest in real estate assets. The company’s homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land directly and through unconsolidated entities in which it has investments. Lennar operates in several segments: homebuilding east, homebuilding central, homebuilding west, homebuilding Southeast Florida, homebuilding Houston, financial services, and Rialto. The homebuilder industry has seen rising demand in the past couple of years that has driven profits much higher for these companies. Look for a homebuilder recovery to continue, and companies such as Lennar to increase profits.

T = Technicals on the Stock Chart are Mixed

Lennar stock has seen an explosive move toward higher prices in recent years. The stock is now pulling back and digesting gains experienced during its latest run, so it may need some time. Analyzing the price trend and its strength can be done using key simple moving averages: 50-day (pink), 100-day (blue), and 200-day (yellow). As seen in the daily price chart below (source: Thinkorswim), Lennar is trading below its rising key averages, which signals neutral to bullish price action in the near-term.