Keep an eye on homebuilder stocks, like KB Home (KBH).

At the moment, the stock is consolidating around $53. From here, we’d like to see it break higher with a near-term test of $60 a share.

While we’re not sure why they were buying (the firm doesn’t disclose), we can speculate that Berkshire believes builders are still capitalizing on the limited housing supply. Even Deutsche Bank says the shortages will keep builders busy.

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“We quickly turned from being cautiously optimistic to decisively bullish on new residential construction,” said Deutsche Bank, as quoted by Fortune. “We expect solid demand for new housing to accompany a continuing normalization of margins and returns, and as book values grow, the stocks should generally move higher, but we see an opportunity for stock selection.”


Ian Cooper