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Ignore The Volatility, Buy Good Businesses
Porter's Journal Issue #29, Volume #2
Porter Stansberry
March 12, 2025
This Capital Efficient Homebuilder Is A Good Investment
This is Porter’s Daily Journal, a free e-letter from Porter & Co. that provides unfiltered insights on markets, the economy, and life to help readers become better investors. It includes weekday editions and two weekend editions… and is free to all subscribers.
The market is going to be volatile over the short term… Ignore the volatility and buy great businesses… This homebuilder is a great business, having transformed itself into a capital efficient, low-debt business… Inflation comes in softer, but consumers remain cautious… |
Table of Contents
On Monday, Porter explained that for various reasons – including less foreign ownership of U.S. Treasuries, continued American energy independence, and the Trump administration’s desire to strengthen the private-sector economy – major structural changes are taking place in the global economy. In the short term, the changes are going to cause market volatility. But over the long term, these shifts should make the U.S. economy much bigger, and make U.S. businesses much more valuable. It should also reduce the size of government, and enable tremendous growth in America’s private sector.
He ended Monday’s Daily Journal with this message:
As an investor, how should you handle this?
My advice: just ignore it.
Keep investing in great businesses at good prices, just like you would anyway.
Use the volatility to pick up great businesses when they’re trading at good prices.
On Wednesday, I’ll tell you about one idea I have.”
Today, he shares that idea…
Last weekend, on X (@porterstansb), I outlined why national homebuilder Hovnanian Enterprises (HOV) has become a much better business than most investors understand and why I believe it’s positioned to become a great, long-term compounder. And here, I’m expanding on the idea. (Full disclosure – I own HOV shares.)
Is buying HOV shares a risky investment? Well, it ain’t The Hershey Company (HSY)! But Hovnanian is a well-established business. It was founded in 1959 and has been a publicly traded company since 1983. So, it has some “Lindy” going for it – our Lindy’s List of businesses are those that have excellent economics and long (at least 20-year) track records. Plus, Hovnanian isn’t a hard business to understand: each year it builds around 6,000 new homes in 13 states, generating $3 billion in revenue.