Kelly G. stared at her spreadsheet in disbelief.
She ran the numbers again.
Then a third time.
"I just updated my spreadsheet and it seems like this should be illegal. The income keeps growing and I can actually imagine that retirement may be a reality within the next decade."
What did she discover?
This brand-new type of investment that transforms companies like Apple and Tesla — that pay little to nothing in dividends — into monthly income machines paying up to 50% annually.
$3,000? $5,000? $10,000?
Whatever your dream income amount is for retirement...
Now, you might be able to hit it with far less money than you think.
>> Watch how to collect up to 50% annual yields starting this month
Tim Plaehn
Analyst Downgrades Hit Homebuilders—But Opportunity Looms
Written by Gabriel Osorio-Mazilli. Published 10/14/2025.
Key Points
- As the macroeconomic backdrop for real estate and construction keeps declining, this weakness shows in recent earnings for homebuilding stocks.
- Wall Street analysts reacted by lowering their price targets and ratings for these names, sending prices lower.
- There is one way to diversify against this volatility, which is through an undervalued REIT portfolio.
Wall Street analysts recently issued a wave of downgrades on several homebuilding stocks, raising fresh concerns about the outlook for the real estate sector. But does their bearish stance hold up under closer inspection? To answer that, investors need to look at the fundamentals and key performance indicators (KPIs) driving these businesses. Here's what the data shows—and what it could mean going forward.
Affected by these downgrades, names like Lennar Corp. (NYSE: LEN) and PulteGroup Inc. (NYSE: PHM) have recently fallen to an average of 74% of their 52-week highs, officially entering bear market territory and marking a decline that goes beyond a routine correction.
Forget Tesla — This Tiny AI Stock Is Musk's Real Play (Ad)
While Wall Street focused on Tesla's earnings, Elon Musk was quietly building a supercomputer so powerful it could transform warfare, robotics, and the global economy. But you don't need to buy Tesla or wait for xAI to IPO to benefit.
One overlooked public company is supplying the critical tech behind Musk's AI push — and it trades for a fraction of Nvidia's price. Hedge funds are already loading up, but most investors haven't noticed yet.
These cuts to price targets and ratings reflect company-reported fundamentals, not just stock-price moves.
Macroeconomic data also matters: building permits in the United States have slipped below the long-term average, pushing the industry toward a slump.
While the homebuilder sector looks risky today, there is a barbell effect elsewhere in real estate. Many real estate investment trusts (REITs) are trading at discounts because of the slowdown among builders, creating potential hedging and diversification opportunities for investors.
What's Driving Prices Lower for Homebuilders?
Overall, average home prices have risen to $512,000, which can create incentive for buyers seeking an appreciating asset. At the same time, building permits have consistently fallen for several quarters. The resulting lower demand for new homes directly pressures builders' margins.
With thinning margins and declining earnings per share (EPS), the analyst downgrades fit an industry-wide slowdown. There are no major company-specific solvency issues being cited; instead, the weakness appears to be sector-wide.
Lennar's Numbers Show Promise (If It Can Deliver)
In the latest quarterly earnings report, Lennar's homebuilding operations showed a 48.5% decline in earnings, driven by slower activity (as reflected in building permits) and higher construction costs—cost pressures that could persist if new tariffs are introduced.
The company reported EPS of $2.29 for the quarter, above the MarketBeat consensus of $2.14, but down about 46% from last year's $4.26—roughly mirroring the drop in homebuilding earnings.
One positive is Lennar's backlog and new orders: 16,953 homes in backlog and 23,004 new dwellings ordered. These provide potential support for future revenue, but because many projects have not yet started they remain vulnerable to cancellation if housing conditions worsen—one of the risks analysts are factoring into their ratings.
For example, Zacks Research now rates Lennar a Strong Sell, and a Bank of America analyst recently cut the price target from $133 to $125, reinforcing the negative sentiment.
PulteGroup Shows It's an Industry Effect
PulteGroup's quarterly results reveal a similar trend. Operating cash flow fell from $657.2 million last year to $421.7 million this year, a roughly 36% decline—driven by the same headwinds facing Lennar. Pulte's backlog of 10,779 homes is encouraging, but these projects also remain subject to cancellation until construction commences.
Analysts are cautious for a reason: weakening cash flows and a slowing construction environment temper the upside implied by backlogs alone. Zacks Research has assigned Pulte a Strong Sell, and a Bank of America analyst trimmed the target from $145 to $140.
The market may not have fully priced in further downside. Over the past month, PulteGroup's short interest rose by 7.1%, underscoring bearish conviction in the housing and construction market.
A Worthy Mention for Diversification
Despite the negativity, some investors may view these dips as buying opportunities—betting that backlogs will convert into completed sales and help support future EPS. If those assumptions prove incorrect, investors can still reduce risk and potentially profit from the broader real estate cycle through diversification.
That is where REITs come into play. This list of three property portfolios highlights several REITs that show signs of potential undervaluation. Because dividend yields serve as a proxy for cap rates—the primary valuation metric for real estate—current payouts suggest some property portfolios may be approaching a bottom.
Unlike homebuilders, these REITs aren't directly exposed to building permits or construction activity; investors focus on the properties they hold and the income those assets generate. For investors looking to hedge exposure to builder risk, discounted REITs can provide a complementary, income-oriented layer of protection.
This email message is a sponsored email sent on behalf of Investors Alley, a third-party advertiser of MarketBeat. Why was I sent this email?.
Information contained in this email and websites maintained by Magnifi Communities LLC (dba Investors Alley) are for educational purposes only and are neither an offer nor a recommendation to buy or sell any security.
Past performance is not necessarily indicative of future results. Trading and investing involve risk, and you may lose your principal investment.
All information contained herein is copyright 2025, Magnifi Communities LLC.
If you need assistance with your newsletter, feel free to email MarketBeat's South Dakota based support team at contact@marketbeat.com.
If you would no longer like to receive promotional emails from MarketBeat advertisers, you can unsubscribe or manage your mailing preferences here.
Copyright 2006-2025 MarketBeat Media, LLC. All rights reserved.
345 N Reid Place, Suite 620, Sioux Falls, South Dakota 57103-7078. USA..
0 Response to "This [income] seems like it should be illegal…"
Post a Comment