Q Are things looking up for my PulteGroup Inc. shares?
M.S., via the Internet
A The nation’s largest homebuilder since its purchase of rival Centex Corp. last year has been buying land in anticipation of a housing revival.
For example, it recently won an aggressive bidding war with six other companies for 88 lots in a Phoenix suburb.
Though home sales have a long way to go, shares of homebuilders have risen on the hope the economy is getting healthier and good news for homes should follow.
Shares of PulteGroup (PHM) recently were up about 25 percent this year after last year’s 9 percent decline. The company’s profitability has lagged some competitors.
PulteGroup sells and builds homes, and purchases, develops and sells residential land and develops adult communities. It operates under the brand names Pulte Homes, Centex Homes and Del Webb in 69 markets, 29 states and the District of Columbia.
The Michigan-based firm also provides mortgage financing, title insurance and other services to home buyers.
The consensus rating on PulteGroup is “hold,” according to Thomson Reuters, consisting of two “strong buys,” one “buy,” 10 “holds” and two “underperforms.”
Earnings are expected to rise 88 percent this year versus the 18 percent gain predicted for the residential construction industry.
Q Is Vanguard Energy Fund worth investing in?
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P.V., via the Internet
A Its diversified mix of energy producers and services tends to make it more resilient than some competitors when the market takes a nosedive.
In addition, its low cost and relatively low volatility provide confidence often lacking in most energy investments.
Shares of the $11 billion Vanguard Energy Fund (VGENX) recently were up 37 percent over the past 12 months to rank in the lower one-fifth of energy stock funds. Their 0.5 percent three-year annualized return ranks around the midpoint of its peers.
“The managers of this fund are great and it is one of our analyst picks in the energy equity area,” said Michael Herbst, analyst with Morningstar Inc. “While investors typically get energy exposure in large value or growth funds, some funds historically have not invested in energy and this would be a great supplement to such holdings.”
Most of the fund is run by Wellington Management’s Karl Bandtel and a small portion by Vanguard’s Quantitative Equity Group, which, under James Troyer, employs computer models. According to filings with the Securities and Exchange Commission, Bandtel has $500,000 to $1 million of his money in the fund.
Vanguard Energy owns many large integrated oil and gas companies that it holds for an average of five years, adding to its holdings on bad company news or negative earnings surprises that reduce stock price. The significant number of large companies can limit gains in periods in which smaller-cap energy stocks or very specialized energy stocks dominate.
Energy stocks comprise more than 90 percent of the fund’s assets, with additional holdings in industrial materials and utilities.
This “no-load” (no sales charge) fund requires a $25,000 minimum initial investment and has an annual expense ratio of 0.28 percent.
Q When does a person need an estate plan?
B.V., via the Internet
A An estate plan includes a will, the assignment of power of attorney and various trusts.
“Everyone definitely needs to have a will because, if you don’t decide how you want your things passed on, the state will decide for you,” said Marilyn Capelli Dimitroff, certified financial planner and president of Capelli Financial Services Inc. “Meanwhile, the power of attorney enables someone to act for you if you are incapacitated.”
Andrew Leckey answers questions only through the column. E-mail him at [email protected].