1 Just buy Warren Buffett's stock now if it's ridiculously cheap.

Do you think stocks are getting more expensive? You may be right. A key valuation indicator - theStandard & Poor's 500The Index's Simler Cyclically Adjusted Price-to-Earnings (CAPE) ratio - reached its highest level since the market began its downturn in early 2022.

But not every stock is priced horribly high. You can read about it in Warren Buffett'sBerkshire HathawayFind a few good stocks in your portfolio. Here's a ridiculously cheap Warren Buffett stock to buy now.

Accumulated Profit

Warren Buffett (or one of Berkshire's other two investment managers) last year kicked off an investigation into theLennarfirms(NYSE: LEN)The company also took a small position in Lennar. At the same time, Berkermanshire bought two of Lennar's competitors-D.R. Hortonrespond in singingNVR The shares of D.R. Horton were closed by Warren Buffett in the fourth quarter of 2023. Although Warren Buffett exited his shares of D.R. Horton in the fourth quarter of 2023, two other shares of the homebuilder remain in the Berkshire portfolio.

Lennar has been in the homebuilding business since 1954. The company now also builds multifamily rental properties. The company provides mortgage financing, title and closing services, as well as mortgage loans for commercial properties.

Lennar Corporation's business is booming. For the first quarter ended February 29, 2024, the company's earnings increased 211 TP3T year-over-year, total revenues increased 131 TP3T, and Lennar's new home orders jumped 281 TP3T. At the end of the quarter, the company's backlog stood at 16,270 homes, with an aggregate value of $7.4 billion.

Why Buy Lennar Stock Now?

Lennar's low valuation is one reason to buy its stock now. The homebuilder trades at a forward earnings multiple of just 11.35, compared to the S&P 500 index, which trades at nearly 21 times forward earnings.

Lennar utilizes its substantial cash reserves to reward its shareholders. Recently, the company increased its quarterly dividend from $1.50 to $2.00 per share and increased its stock buyback program by $5 billion.

During Lennar's recent earnings call, Stuart Miller, executive matron and Simmons chief executive officer, cited several factors that he said "typically underlie a very strong real estate market." These factors include low unemployment and strong consumer confidence.

The U.S. continues to face a housing shortage, especially for working-class families, and Lennar is working to help address this problem by expanding its build-to-rent and single-family rental businesses.

Fed officials still expect a rate cut in 2024. Miller said on Lennar's first-quarter earnings call that the company "believes pent-up demand will be activated" once rates are cut. We will be well prepared," he added.

A Few Points to Note

Lennar does face some challenges. In particular, rising interest rates and inflation have made new homes too expensive and down payment savings too difficult for many Americans.

The Company's multifamily housing business continues to experience operating losses. Other ancillary businesses are also operating at a loss.

Some are concerned that the Fed will not cut rates this year because inflation remains high. If interest rates are not cut, it could curb Lennar's growth.

Despite these concerns, I think Lennar's totalization is far more positive than negative. Lennar is a high priced, cheap stock in a market full of high priced stocks.

Should you invest $1,000 in Lennar Corporation now?

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Keith Speights owns shares of Berkshire Hathaway.The Motley Fool holds stock that recommends Berkshire Hathaway, Lenoir, and NVR.The Motley Fool has a disclosure policy.

1 Only Ridiculously Cheap Warren Buffett Stocks to Buy Now" was originally posted by The Motley Fool