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The Ratings Game: Home builders are a buy again, says Wedbush

Bloomberg
Lennar Corp. signage is displayed outside a sales office at the Creeks of Legacy development in Prosper, Texas.

As low mortgage rates bolster demand and the economy remains supportive, homebuilder stocks are now the preferred proxy for housing market demand for analysts at Wedbush, according to a note published Thursday.

The Wedbush team upgraded Lennar LEN, +1.90%LEN.B, +1.59% to outperform on the same day, and maintained an outperform rating on Taylor Morrison Home Corporation TMHC, +0.88% , Beazer Homes USA Inc. BZH, +1.76% , and Century Communities, Inc. CCS, +1.57%

That’s a shift from a prior call, in which lumber distributors were their preferred way of playing housing, but with lumber price volatility spiking and housing fundamentals looking healthier, “investors should be willing to pay a higher multiple for homebuilder earnings,” the analysts wrote.

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