If you look around, you may notice that the housing market looks pretty strong right now. Housing starts are up to 1.35 million, the inventory of houses for sale is hovering around all-time lows, and home prices are incredibly attractive for those looking to sell. Toss in the fact that millennials are entering the housing market in droves to buy their first home, and it would be completely reasonable to think that buying homebuilder stocks would be a great idea.
The seed for a great investment idea is there, but there is one issue: Homebuilding is a crappy business. It’s incredibly capital-intense, margins aren’t that great, turnover of inventory is relatively slow, there aren’t a lot of ways for companies to differentiate themselves, it’s cyclical, and it’s fragmented. For a company to be a good investment in this business, it needs to have an exceptionally good management team, economies of scale, and a significant advantage over others in a unique way.
This isn’t to say that investing in homebuilding is an awful idea — the trends mentioned above are incredibly strong indicators that investing in housing can pay off. What matters is you have to be incredibly discerning when selecting the business in which you want to invest. To me, there are only two stocks that are really worth exploring as potential investments. Here’s why these two homebuilders stand out among the crowd.
Top Energy Stocks To Invest In Right Now: ONEOK Inc.(OKE)
ONEOK got its start more than a century ago as an interstate natural gas pipeline business in Oklahoma. Today, it’s one of the largest midstream energy companies in the U.S., operating more than 38,000 miles of pipelines. A significant portion of that expansion has come in the past two decades, which has generated a windfall for investors. Overall, the pipeline giant has produced a total return of more than 1,890% in the last 20 years, which would have turned a $5,000 investment into more than $94,500. Like Enterprise, the bulk of that return came via the company’s lucrative dividend.
ONEOK expects to continue growing shareholder value in the coming years. It currently has about $4 billion of high-return expansion projects underway, which positions it to increase its high-yielding dividend at a 9% to 11% annual pace through 2021 and puts it in a class of its own. The company’s ability to grow its high yield at a high rate has the potential to generate top-tier total returns for investors over the next few years.
While exciting growth stocks grab most of the headlines, dividend growth stocks have historically outperformed their stingier peers over the long term. That has certainly been the case for these two pipeline companies for the last two decades. Meanwhile, with ample fuel to continue growing their dividends in the coming years, both of these pipeline companies appear poised to outperform in the future, making them excellent stocks to consider buying for the long run.
Top Energy Stocks To Invest In Right Now: Innovate Biopharmaceuticals, Inc.(INNT)
Innovate Biopharmaceuticals stock skyrocketed 75% this week. Even before this big move, Innovate was already the best-performing biotech stock of the first half of 2018. Its recent gains cemented its spot at the top.
The company had a couple of developments this week that helped boost its share price. On Monday, Innovate announced that it was being added to the Russell 3000, Russell 2000, and Russell Microcap indexes. The biotech also announced on Thursday that it had entered into a research and development collaboration with O. Colin Stine at the University of Maryland School of Medicine. Stine plans to study Innovate’s lead candidate, larazotide acetate, in correcting the dysfunctional intestinal barrier and the dysfunctional microbiome.
Innovate hopes to advance larazotide acetate to a phase 3 clinical study targeting treatment of celiac disease. The drug has also attracted considerable interest due to its potential in treating other inflammatory diseases, especially nonalcoholic steatohepatitis (NASH).