NicoElNino
Summary
- Redfin’s stock has risen 83% year-to-date, however, the company is expected to lose $1.19 per share this year, and $0.99 per share next year.
- MGIC, a housing stock, is expected to earn $2.14 per share this year and $2.24 per share next year, making it a more attractive investment according to the author.
- Despite Redfin’s high web traffic and market share, the company’s earnings losses and negative book value make it a less appealing investment compared to MGIC.
- MGIC has a number of strengths, including low-risk underwriting, significant reinsurance protection, lots of excess capital, and earnings that are largely free cash flow.
I’ve written several articles on Redfin for Seeking Alpha in the past, most recently on August 10, 2022. Since then, other stories were more interesting to me. But when I clicked on “RDFN” yesterday, the stock was up 24%, and a whopping 83% year-to-date. Meanwhile, MGIC, one of my favorite housing stocks, is up a relatively paltry 21%. Best of all, the stock prices are nearly identical – as I write this, MGIC is at $16.01 and Redfin is at $15.23. Value investing pair trades don’t get much better than this – Buy MGIC, sell Redfin.
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