03. Forestar Group Inc. (NYSE:FOR)
Upside Potential: 37%
Average Analyst Share Price Target: $26.50
Forward P/E Ratio: 5.76
Forestar Group Inc. (NYSE:FOR) is turning heads in the real estate sector for all the right reasons. Specializing in residential lot development, the company focuses on acquiring and developing land to provide finished lots to homebuilders, most notably, its largest customer, D.R. Horton. With a forward P/E of just 5.76 and a 37% upside based on analysts’ average price target of $26.50, compared to its $19.37 share price as of June 18, Forestar stands out as one of the best value plays in real estate today.
While Q2 2025 earnings came in slightly below expectations at $0.62 per share versus an expected $0.71, the company still reported a solid $351 million in revenue, up 5% year over year. More importantly, lots sold surged 46% sequentially to 3,411, and the firm’s backlog hit a four year high, with 25,400 lots under contract, representing $2.3 billion in future revenue.
Forestar Group Inc. (NYSE:FOR) continues to execute its expansion strategy, entering 10 new markets and increasing its community count by 21%. Even in a softening housing market, the company remains resilient by focusing on affordable lot development, maintaining efficiency in land development, and closely aligning with D.R. Horton’s geographic footprint.
Financially, Forestar Group Inc. (NYSE:FOR) is in strong shape. It ended the quarter with $792 million in liquidity, minimal near term debt maturities, and a net debt to capital ratio of 29.8%. The company also refinanced $500 million in senior notes, extending its debt maturity profile and bolstering its financial flexibility.
Operationally, the company is on track to deliver between 15,000 and 15,500 lots in fiscal 2025, generating up to $1.55 billion in revenue. Their robust capital structure and strategic focus make them more agile than competitors, many of whom are burdened by restrictive, high cost project level loans.
With its low valuation, strong backlog, national expansion, and a rock solid balance sheet, Forestar Group Inc. (NYSE:FOR) is not just surviving the current housing slowdown, it’s strategically positioning itself to thrive, making it a top pick among real estate stocks right now.