This billionaire is still bullish on U.S. housing...

This billionaire is still bullish on U.S. housing... Why this major Buffett holding's latest earnings are bullish for housing... Housing posts its biggest price gain in six months... Another blowout quarter for Apple...
 

Editor's note: Yesterday, we told you our live training session taking place this Thursday with Stansberry Short Report editor Jeff Clark. But we've had to make a few changes...
 

As you may know, Stansberry Research is based in Baltimore, Maryland. Given the civil unrest in the area, the city has enacted a 10 p.m. curfew.
 

Because we broadcast all of our live training sessions from our headquarters, we had to reschedule Thursday's live event to begin at 3 p.m. Eastern time.
 

We apologize for any inconvenience this may cause. And if you'd like to reserve your spot for this live training with Jeff Clark, simply click here.
 

 

 One of the richest men in the world – Blackstone Group CEO Steve Schwarzman – still thinks housing is a good opportunity...
 

Of course, Blackstone Group is the largest owner of single-family homes in the U.S. with 47,000 units... so a further uptick in home prices is a boon to its bottom line. The company took advantage of cheap housing prices and record-low interest rates to buy swaths of single-family homes in the depths of the financial crisis.
 

And while Blackstone's buying spree has slowed (the company now has a $90 billion real estate portfolio – its largest sector), Schwarzman told CNBC this week that housing is still a "good investment" despite a slowdown in housing-price increases...
 

We still put a little bit [of money into purchasing homes] now. Not as much nearly as we did at the bottom... We're finding that the market continues to go up for the value of houses, although not at the same rate that it did obviously off the bottom.

 True Wealth editor Steve Sjuggerud recommended shares of Blackstone in November 2012. He explained why Blackstone was a backdoor way to profit off the rebound in housing in a January 2013 DailyWealth essay... 
 

Blackstone could ultimately trade for $36 in the next two years. That's 100%-plus higher than today's price.   Going forward, as more and more investors understand that Blackstone has placed so many of its chips on real estate, I expect its share price will act more like a leveraged bet on U.S. real estate... And that's exactly why I'm interested.   If you're looking for an easy way to invest in residential real estate, Blackstone is the answer. The company could double your money in as little as two years.

 Steve was right (again). Shares closed yesterday at $41.59, up 243% since his recommendation. And as Editor in Chief Brian Hunt explained in the April 16 Digest, True Wealth subscribers are now collecting a 15.7% yield on their initial investment.
 

 In the April 20 Digest, we reviewed why Steve is still bullish on real estate. In short, based on prices and interest rates, housing is still affordable for most Americans.
 

 Stansberry Research analyst Paul Mampilly sent us another note on housing's strength today.
 

In the April 2 Digest, Paul explained why he thinks housing construction will continue to boom...
 

I believe housing construction is going to continue to be strong for a long time... certainly longer than anyone expects right now. Why? Because we simply haven't built enough houses.                                        You probably think that's crazy, but it's true. Let me explain. You see, on average, we need about 1.5 million housing starts per year. We haven't come anywhere close to that for more than seven years now. Three more years and it'll be a decade of underbuilding.

 Today, he noted the recent earnings from one of legendary investor Warren Buffett's big holdings, USG. Buffett owns a 27% stake in the company, which announced better-than-expected earnings last week. From Paul...
 

USG is the largest maker of wallboard (aka sheet rock or drywall) in the United States, with 26% of the market. Every house uses drywall today. These are the materials that compose your walls. If no one is building or refurbishing houses, there is no demand for drywall.   This is exactly the kind of easy-to-understand business that Buffett makes a habit of buying near the bottom and selling at the top.

 Because of its product's importance to construction, Paul pays attention to USG's earnings to gauge the health of the U.S. housing market. And last week, USG told us drywall sales are booming... 
 

For the first quarter of 2015, USG wallboard sales are up 7%. That's nearly double the sales growth from 2014. Another sign of strength is that USG is raising prices but buyers keep coming. So USG is getting higher prices and selling more volume. That combination is a great sign that demand for wallboard is strong. You can't raise prices in an environment where demand is weak.

 USG's results are yet another sign the U.S. housing market is posting a solid recovery. But Paul offers still more proof...
 

The National Association of Realtors (NAR) is also confirming this signal, reporting that home sales have surged to their highest level in 18 months. Lawrence Yun, NAR's chief economist, says "the combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years."   NAR is also reporting rising home prices. NAR's numbers show that the median existing-home price for all housing types reached $212,100 in March. That's 7.8% higher than March 2014 and the highest level since February 2014, when prices jumped 8.8% year-over-year.   I mentioned before that stocks that are associated with housing are going to go up and keep going up for at least three years. USG's results and NAR's report on home sales are more evidence that this is right.

 And today, the Case-Shiller Index – which measures the prices of single-family homes across 20 of the largest cities in the U.S. – jumped 5% in February from the same period a year ago. That's up from a 4.5% pace in January.
 

It's the largest annual price increase in six months. All 20 cities reported year-over-year price gains.
 

The price increase is due in part to low supply (supporting Paul's thesis that we'll see a construction boom). The number of homes for sale nationwide is equal to 4.6 months of sales – below the six-month supply that is typically considered "healthy."
 

 More bullish news from Apple, which just announced another round of blowout earnings...
 

The consumer-products giant reported that it sold more than 61 million iPhones in the first quarter, up 40% from the first quarter of 2014. CEO Tim Cook noted that 20% of Apple users have upgraded to the iPhone 6 and told the Wall Street Journal that the newest iPhone has led to "a higher rate of switchers than previous iPhone cycles."
 

Apple also announced that profits and net income were both up 33%, and revenues rose 27% from the same period in 2014.
 

 Apple also announced that its cash hoard has risen to nearly $194 billion, up from $178 billion at the end of last quarter. And it's using that cash to reward shareholders. The company announced an 11% dividend increase and said it would buy back an additional $50 billion in shares by March 2017. As the Wall Street Journal noted, "The latest update means Apple plans to return an additional $88 billion in cash to shareholders over the next two years."
 

Cook also highlighted a record-breaking performance from the App Store... announced that its Apple Pay mobile payment system now covers all major credit-card companies. (For more on Apple Pay, you can reread the February 11 Digest.) And he noted bullish early sales figures for the new "smart" watch, the Apple Watch.
 

 Part of the reason this was such a strong quarter for Apple was due to emerging markets like China.
 

The company announced that phone sales were up more than 70% in China. Revenue was up 71% in the greater China market (which includes Hong Kong and Taiwan). As Cook noted... 
 

There are more people moving to the middle class in China than I've ever seen before or could ever imagine. The size of the market and the love of the smartphone, in particular the iPhone, is incredible.

 Apple shares briefly hit a new all-time high of $134.54 today. Apple's market cap is now a record $774 billion – on its way to $1 trillion, according to Extreme Value editor Dan Ferris.

Dan's Extreme Value subscribers are up nearly 120% on Apple since he first recommended shares in June 2013.
 

And here's a fun fact about Apple: The company is now more than twice the size of the next biggest company in the S&P 500 – ExxonMobil, with a $365 billion market cap.
 

The last company to do that was IBM from 1983 to 1985. "That was when PCs were new," according to Howard Silverblatt, senior index analyst at Standard & Poor's. "And just about everyone thought IBM would rule the world."
 

 Silverblatt was arguing that Apple could fall from grace... But as large as it is today, the company trades for just 14 times forward earnings. That's cheap for one of the world's best companies.
 

Plus, billionaire activist investor Carl Icahn, who owns a $7 billion stake in Apple, is still bullish. He posted the following message on social-media website Twitter...
 

$AAPL is still undervalued and misunderstood. Expect to put out another in-depth report within two weeks.

 New 52-week highs (as of 4/27/15): Deutsche X-trackers Harvest China A-Shares Fund (ASHR), Blackstone Mortgage Trust (BXMT), WisdomTree Japan SmallCap Dividend Fund (DFJ), iShares China Large-Cap Fund (FXI), SPDR S&P International Health Care Sector Fund (IRY), Guggenheim China Real Estate Fund (TAO), and ProShares Ultra FTSE China 50 Fund (XPP).
 

 One subscriber chimes in with his take on Porter's "magic portfolio." If you haven't read Porter's Friday Digest yet, we'd urge you to do so. It's well worth your time. And be sure to send your e-mails to feedback@stansberryresearch.com.
 

 "I agree with all of what you say, except with the use of leverage. The stock market has over ten years a very good chance of an extreme bout of volatility downward, which can seriously damage even the least volatile portfolio that is levered. I think that leverage, which works both ways, should be reserved for the most long-dated, least volatile assets such as prime residential real estate that one can actually use as a personal residence, after one has covered the liability with a solid long-term cash earnings stream from a steady job or similarly maturing solid assets (probably US government obligations).
 

"Even ADP, JNJ, PG can stumble along with the market. And although the difference between an 18% and a 20% annual return is really material over a ten year period, adding back the riskiness adds volatility, an older investor's enemy. Of course, if you are really wealthy the leverage should not pose not a problem but an opportunity. In general, though, y'all give great advice, and I like reading about and occasionally acting on your best recommendations. Targa Resources Group was one of the best ever, and comprehensively well-reasoned. (Sneakily, maybe I will lever up WRB a little.)" – Paid-up subscriber David Moran

Regards,

Sean Goldsmith

Baltimore, Maryland

April 28, 2015