FOR (31.61) is majority owned by the DR Horton (DHI) the nation's largest homebuilder (along with LEN). DHI just reported a very strong quarter with orders up 14% y/y. FOR sells the vast majority (I think over 90%) of it's building lots to DHI, so they'll benefit directly from the solid order growth at DHI.
FOR hit an all time high of $40.79 a few days ahead of the earnings and is now down nearly 25% since then, so quite a haircut, although it's only back to where it was trading just two months ago. I think there's technical support at around $30 which is near book value of $29. I'm accumulating shares on weakness, but still have just a small <1% position. I like their long term growth prospects.
The conf call was generally very positive and included these remarks about getting back to 20% growth and doubling market share as they expand sales to other homebuilders -
Of the $1.5 billion to $1.6 billion that we're going to spend this year, about a third of that will be on land acquisition. And those projects can take anywhere from 12 to 15 months to deliver that first phase. And so, we're really investing to grow in 2025 and beyond. We do want to get back to high growth at that 20% range or maybe even a little bit higher.
We are a market leader in a highly-fragmented and undercapitalized industry and are uniquely positioned to take advantage of builder demand for finished lots. There is a significant opportunity to expand our presence in the markets we operate in and our goal remains the same, to double our market share to 5% over the intermediate term. We expect to aggregate significant market share over the next few years while maintaining our disciplined approach when investing capital to enhance the long-term value of Forestar.
Elevated mortgage interest rates continue to impact affordability, but the underlying fundamentals of a housing shortage remain in place. We believe the low supply of existing homes will continue to drive buyers to new construction and our strong relationship with D.R. Horton provides a clear path for growth.
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