IBD Stock Analysis
- Housing-related REIT working on 41.93 buy point
- Relative strength line trending lower after solid advance
- Earnings, sales growth accelerating
Industry Group Ranking
Cup with Handle
* Not real-time data. All data shown was captured at 1:20PM EST on 11/19/2021.
The housing market soared during the pandemic as demand rose out of a push for more space as many worked from home. On the supply side, lumber and other supply chain shortages along with a labor crunch sent home prices rising by nearly 20%.
The housing boom didn’t just help homebuilders. Invitation Homes, the largest owner of rental homes in the U.S., also saw a benefit from soaring demand. The company, a real estate investment trust, or REIT, owns over 80,000 homes that it rents out in the U.S.
In October, Invitation Homes reported Q3 results that beat analysts’ top and bottom line estimates, with growth on both ends accelerating for a third straight quarter. The company was able to raise rents by 11% amid the housing shortage. It has an impressive three-year funds from operations — similar to earnings per share — growth rate of 97%, according to IBD Stock Checkup. But its three-year sales growth rate is only 4%.
Shares fell 0.4% to 40.91 on the stock market today. INVH stock is in a cup-with-handle base with a 41.93 buy point, according to MarketSmith analysis. On Thursday and Friday morning, Invitation Homes stock appeared to offer an early entry, breaking above a trend line in the handle. But with shares pulling back slightly, aggressive traders might want to see INVH stock clear Friday’s intraday high of 41.25 before stepping in.
The REIT’s relative strength line has been trending sideways. The RS line compares a stock’s performance with that of the S&P 500. When the RS line is climbing, this means it is outperforming the benchmark index.
INVH stock has a 90 Composite Rating out of a best-possible 99 and an EPS Rating of 96. The Composite Rating compiles scores on key fundamental and technical metrics: earnings and sales growth, profit margins, return on equity and relative price performance. Investors should focus on stocks with a Composite Rating of 90 or higher.
Invitation’s Accumulation/Distribution Rating, which reflects institutional buying and selling of a stock, is a C+, according to the IBD Stock Checkup tool. That means there is slightly more buying than selling.
INVH is the No. 12 ranked stock in IBD’s Finance-Property REIT Group.
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