• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Jim Cramer

Jim Cramer: Superb Homebuilder Lennar Keeps on the Straight and Narrow

Even as rates are extraordinarily low, even as employment is strong, there's an innate caution developed from the Great Recession.
By JIM CRAMER Jan 09, 2020 | 07:54 AM EST
Stocks quotes in this article: LEN, TOL

Maybe companies are just better than they used to be. Maybe that's why stocks are so strong. I was pondering this thought as I tore through the always thoughtful Lennar (LEN) conference call, the dissection of still one more record breaking juggernaut of a three month period for this superb homebuilder with a huge $1.6 billion cash flow, more margin improvement and a 23% increase in orders.

Now I could single out any number of companies for still one more incredible performance. We seem to get a few every week now, companies that are just doing amazing things with every aspect of their business whether it be personalization and digitization or customer retention and streamlining.

But Lennar is a textbook case of what I am talking about because it is in a business that was notorious in the old days for taking way too many risks and doing stupid things like levering up at the top or building way too many homes or taking down way too much land inventory at the exact wrong time.

Lennar, long run like the family business that it was when Leonard Miller started it more than 60 years ago, never took the risks that so many of its compadres did because Leonard was one tough hombre. He taught his son, Stuart, well and Stuart steered his company through the downturn as well as could be possible.

Stuart wasn't content to just ride it out, though. He put through concrete changes, keeping the balance sheet lean, making sure that the company didn't get ahead of its skis. Homebuilders in general, though, have never been known for prudence and in a strong economy like this one they would typically be overbuilding in the hottest markets.

That's just not happening this time around. Even as rates are extraordinarily low, even as employment is strong, there's an innate caution developed from the Great Recession that keeps companies like Lennar on the straight and narrow no matter what.

I could say the same thing by the way about Toll Brothers (TOL) . It, too, is simply not taking advantage of all the capital it can get ahold of and putting up homes everywhere it can. Both Lennar and Toll care more about keeping debt levels low and manageable, and they buy back their stock rather than buying thousands of acres of speculative land.

It's that conservatism that runs through so many industries these days. They just aren't taking the chances they did before the Great Recession. They are always trying to save, they don't take gambles or risks that bet the company. You can hear the analysts almost cringe at the conservatism sometimes. I detect in these homebuilder calls that they wish these construction companies would tap the capital markets to build more homes right now! They aren't going to do it, though, not to satisfy Wall Street, because they have no desire to be held hostage to the Fed chief, the broader economy or the costs of labor and materials. They want to be in control.

A homebuilder is never going to be able to shake the importance of interest rates to his business. That's not going to happen. But one of the reasons why I don't fear a slowdown as much as I used to is because companies like Lennar fear it for me. It's been 10 years since the downturn and they are still running scared, and that maybe more than most other issues, is what makes me less worried if the slowdown that no one is seeing, occurs.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

TAGS: Economy | Interest Rates | Investing | Markets | Stocks | Trading | Housing Market | Jim Cramer |

More from Jim Cramer

Jim Cramer: I'll Put My Money With 'Boring but Lucrative' Any Day

Jim Cramer
Sep 29, 2021 1:28 PM EDT

Let's look at that recent downgrade of 'dull' Morgan Stanley and see why exciting is best left for the stadiums and amusement parks -- and not stocks.

Jim Cramer: America's Toughest Job? Finding Workers

Jim Cramer
Sep 28, 2021 12:17 PM EDT

It's the question of our time: Where are the people willing to take on these better paying gigs? Let's see what's going on and what we need to happen.

Jim Cramer: Here's How Analysts Can Be Off By a Wide Margin

Jim Cramer
Sep 24, 2021 12:02 PM EDT

Let's look at the reactions to Nike, Costco and Salesforce to see what happens when they're viewed from a real world perspective.

Jim Cramer: It's Pure Insanity That We Don't Make Chips Here in the U.S.

Jim Cramer
Sep 23, 2021 11:05 AM EDT

While the big guns meet at the White House about the global chip shortage, the president and these companies are approaching this all wrong.

Jim Cramer: Go Ahead, Have a Cow, but I Say Powell and Xi Are Bulls

Jim Cramer
Sep 22, 2021 3:51 PM EDT

We rallied, because China's President Xi and Fed Chair Powell made decisions that they knew would lead to rallies.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 04:41 PM EDT PAUL PRICE

    First Half Results - Putrid Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 marked...
  • 04:51 PM EDT PAUL PRICE

    We Should Be in for Better Starting Soon

    Window dressing Thursday, the last day of the...
  • 11:56 AM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    Check out what's going on in the Stocks Under $10 ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login