Analysts advise grabbing PulteGroup. What about PennyMac?

Analysts advise grabbing PulteGroup. What about PennyMac?

The stock markets have been turbulent and volatile during the last few months. After the coronavirus outbreaks had grown into the pandemic, lots of businesses had to close or move on the online work if possible. The majority of companies suffered severe losses, trading in the red for months. Only a few percentages managed to stay afloat in the face of a global crisis. 

 

Choosing profitable stocks is a hard business on a good day. However, it’s doubly difficult when facing a struggling economy. Interest rates are close to zero, while the stock market is posting new highs. However, all this may change soon. Still, there are several good shares, which are ripe for grabbing now, while the prices are low. 

 

Here are two stocks which are a Buy in September

 

PulteGroup is a diversified homebuilder. The company had to suspend land investments for a while due to the coronavirus. That will affect 2020’s numbers. However, Pulte has just reported a massive rise in orders at the tail end of the second quarter. 

 

Thus far, the company saw a 77% increase in orders from first-time homebuyers. Furthermore, earnings growth is 17% this year. Analysts estimated next year’s growth to be 12%.

 

On the other hand, PennyMac Financial Services is one of the biggest mortgage servicers and originators in the United States. After the crisis encouraged a massive amount of monetary support from the Fed, short-term interest rates fell to zero.

 

Thanks to lowering rates, millions of consumers can reduce their monthly mortgage payments significantly by refinancing. PennyMac is trading in the low 50s presently, but analysts expect it to earn $15.31 per share in 2020. 

 

once a borrower refinances at current rates, the likelihood of another refinance is very low. So, the next year or two should be peak earnings. While this effect is negative for the origination business, PennyMac Financial also has a mortgage servicing arm. And it will benefit from this effect. When rates increase, the company’s portfolio of mortgage servicing assets will also gain in value.

 

 

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