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Investors who target stocks displaying relative strength often find themselves in favorable trends, no matter the direction of the general market. For a quick explanation, relative strength focuses on stocks or other assets that have performed well relative to the market as a whole or a relevant benchmark.

And in 2023, several homebuilders, including NVR (NVR - Free Report), Lennar (LEN - Free Report), and D.R. Horton (DHI - Free Report), have all displayed relative strength, handily outperforming the general market. This is illustrated in the chart below.

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For those interested in tapping into the recent momentum, here is a closer look at each.

NVR

NVR is engaged in constructing and selling single-family detached homes, townhomes, and condominium buildings. Analysts have increased their earnings expectations across nearly all timeframes, helping land the stock into a favorable Zacks Rank #1 (Strong Buy).

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NVR shares aren’t stretched regarding valuation, with the current 13.3X forward earnings multiple sitting well beneath the 15.1X five-year median and the Zacks Construction sector average. The stock carries a Style Score of “B.”

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D.R. Horton

D.R. Horton is a leading national homebuilder primarily engaged in the construction and sale of single-family houses in both the entry-level and move-up markets. The stock also boasts the highly-coveted Zacks Rank #1 (Strong Buy).

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The company posted a blowout quarter in its latest release, penciling in a 44% EPS beat. Quarterly revenue totaled $7.9 billion, 20% ahead of expectations and essentially flat from the year-ago period. Impressively, the results reflected the company’s second consecutive quarter of posting a double-digit percentage EPS surprise.

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Lennar

Like the stocks above, analysts have recently become bullish on Lennar’s earnings outlook, with estimates increasing across all timeframes over the last 60 days. The stock is a Zacks Rank #2 (Buy).

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For those with an appetite for income, LEN shares have that covered; the company’s annual dividend presently yields 1.4% with a sustainable payout ratio at 9% of earnings. Undoubtedly a major highlight, LEN is committed to increasingly rewarding its shareholders, boasting a rock-solid 85% five-year annualized dividend growth rate.

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Bottom Line

Targeting stocks displaying relative strength is an excellent way for investors to insert themselves in favorable market trends.

And in 2023, several homebuilders, including NVR (NVR - Free Report), Lennar (LEN - Free Report), and D.R. Horton (DHI - Free Report), have all reflected relative strength, outperforming the general market handily. In addition, all three sport favorable Zacks Ranks, indicating near-term optimism from analysts.

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