4 Homebuilding Stocks to Buy: Truist Initiates Coverage

Truist Initiates Coverage on Homebuilders

Truist Securities has initiated coverage on the U.S. homebuilding sector, assigning Buy ratings to four key companies. The firm recommends investors position for a potential upcycle in 2027, despite forecasting a challenging year in 2026.

The four companies receiving Buy ratings are PulteGroup (PHM), Taylor Morrison (TMHC), Toll Brothers (TOL), and Meritage Homes (MTH).

Sector Outlook and Projections

According to Truist, 2026 is expected to be a bottom year for both margins and demand, with potential declines in revenue and average selling prices. However, this trough is projected to pave the way for notable earnings growth in 2027.

The firm notes that homebuilder stocks typically rally at the first signs of a new cycle, justifying the early investment recommendation.

Specific Stock Recommendations

Truist set specific price targets for each stock: $170 for PulteGroup, highlighting its strong lot supply; $85 for Taylor Morrison, citing its undervaluation; $190 for Toll Brothers, due to its position in the luxury market; and $90 for Meritage Homes, praising its unique spec strategy.

Investment Summary

The core thesis from Truist is that the anticipated market bottom in 2026 presents a strategic entry point for investors. By positioning now, investors could capture significant upside during the expected 2027 recovery in the housing market.

FAQ

Q: Which homebuilding stocks did Truist rate as "Buy"?
A: Truist assigned Buy ratings to PulteGroup (PHM), Taylor Morrison (TMHC), Toll Brothers (TOL), and Meritage Homes (MTH).

Q: Why is Truist optimistic about a 2027 recovery?
A: The firm believes 2026 will represent a cyclical low for margins and demand, creating a strong foundation for significant earnings growth the following year.

Source: Investing.com