Citizens JMP Lifts PT on LGI Homes (LGIH) Stock

LGI Homes, Inc. (NASDAQ:LGIH) is one of the Best Housing Stocks to Buy According to Hedge Funds. On August 27, Citizens JMP lifted the price target on the company’s stock to $85 from $75, while keeping an “Outperform” rating, as reported by The Fly. As per the firm, the company has a plan to deal with reduced demand while remaining profitable and managing leverage. The firm further finds the stock’s valuation attractive. In Q2 2025, LGI Homes, Inc. (NASDAQ:LGIH) delivered 1,323 homes at an average sales price of $365,446, leading to $483.5 million in revenue.

Furthermore, its gross margin and adjusted gross margin rose 190 bps sequentially to 22.9% and 25.5%, respectively. LGI Homes, Inc. (NASDAQ:LGIH) continues to pursue opportunities for cost savings and improved efficiency, while focusing on fueling additional improvement in the profit margins and EPS. LGI Homes, Inc. (NASDAQ:LGIH) is confident in the broader housing market’s long-term outlook, thanks to the healthy demographics and a structural shortage of new homes.

River Road Asset Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“Another poor performer was LGI Homes, Inc. (NASDAQ:LGIH), the 15th largest homebuilder in the U.S. specializing in entry-level homes for first-time buyers. The stock rallied in Q3 on the prospect of lower mortgage rates due to several projected rate cuts by the Fed. After the U.S. presidential election, the Fed reversed course and interest rates increased, and LGIH began to lag the market. LGIH’s Q3 2024 results exceeded expectations despite ongoing affordability challenges for homebuyers. Home sales revenue rose mainly due to an increase in the average sales price (ASP) to $371k, up 5.2% year-over-year. Home closings for the quarter totaled 1,757 homes, flat compared to the prior year but up 6% sequentially. LGIH reduced its expected closings for fiscal year (FY) 2024 to 6,100-6,400 homes from the initial 7,000 8,000 range, while raising gross margin expectations. Amid a U.S. housing shortage estimated at two-to-four million homes, we believe prioritizing margins over volume is the right strategy for LGIH, which has spent the last two years building its inventory of developed lots and raw land. Q3 gross margins were flat year-over-year in stark contrast to industry peers who reported gross margin declines, particularly at the entry-level segment. Active community count grew 30% year-over-year and 8% sequentially to 138, positioning the company to meet its year-end target of 150 active communities and significantly increase home closings in FY 2025. We took no action on the position.”

While we acknowledge the potential of LGIH as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.