D.R. Horton, Inc. (DHI): A Bull Case Theory

We came across a bullish thesis on D.R. Horton, Inc. on Disruptive analytics’s Substack by Magnus Ofstad. In this article, we will summarize the bulls’ thesis on DHI. D.R. Horton, Inc.'s share was trading at $150.42 as of January 29th. DHI’s trailing and forward P/E were 13.66 and 13.77 respectively according to Yahoo Finance.

D.R. Horton, Inc. operates as a homebuilding company in East, North, Southeast, South Central, Southwest, and Northwest regions in the United States. DHI presents a clear and straightforward investment case driven by the eventual return of lower interest rates, which would restore homeownership affordability for millions of Americans.

A large pool of Millennials, delayed in buying their first homes due to years of high prices and tight credit, represents significant latent demand that could fuel a housing market rebound once conditions normalize. Through a combination of organic growth and strategic acquisitions, DHI has become the largest homebuilder in the U.S., with broad geographic coverage and the highest market share among first-time homebuyers.

This positions the company to benefit most if the housing market recovers. While investors have explored related plays in mortgage lenders or home improvement retailers, DHI provides direct exposure to housing, with seasoned management capable of navigating economic cycles and maintaining disciplined cost control. Its conservative financial profile, including a debt-to-EBITDA ratio near 0.5, enhances its resilience. The new construction downturn appears to have bottomed, with DHI projecting 86,000–88,000 homes in the coming fiscal year, roughly in line with current volumes.

At current levels, the stock is attractively valued with a forward P/E below 13, significantly lower than the broader market, while analysts’ price targets vary widely, reflecting the cyclical nature of the business. Over the past decade, DHI has compounded returns by 355%, demonstrating its ability to grow through cycles. For investors, patience is key; the strategy is to build positions at favorable prices during market weakness, ultimately capitalizing on a housing market recovery that could drive substantial long-term upside. DHI thus offers a direct, resilient, and disciplined way to participate in the eventual housing rebound.

Previously, we covered a bullish thesis on D.R. Horton, Inc. (DHI) by Let it Compound in May 2025, which highlighted the company’s decentralized model, strong returns, low leverage, and disciplined capital approach supporting steady home closings. DHI’s stock price has appreciated by approximately 19.61% since our coverage due to operational execution. Magnus Ofstad shares a similar thesis but emphasizes housing affordability and pent-up Millennial demand.

D.R. Horton, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held DHI at the end of the third quarter which was 64 in the previous quarter. While we acknowledge the potential of DHI 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.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.