Yesterday, Ensemble CIO Sean Stannard-Stockton appeared on CNBC to discuss recession risk, our market outlook, thoughts about Fed policy and some of our favorite investment ideas. In the clip below, Sean discussed both the home builder NVR and payroll processing company Paychex.

On NVR and the large homebuilders more generally, Sean talked about the surprising strength in the stocks and how this is being driven by likely large market share gains. With so many existing homes owned with a 3% mortgage homeowners are unlikely to want to sell, so a larger than normal portion of total home sales in the years ahead will need to be made up of new homes. And the largest builders, with low debt and high cash levels, are well positioned to take share from smaller builders.

On Paychex and payroll processing more generally, these businesses are more defensive than most investors appreciate. For instance, in the Great Financial Crisis of 2008-09, Paychex revenue only fell 4%. While a 2%-3% rise in the unemployment rate is common even during mild recession, this only represents about a low single digit decline in employment levels and thus a mild headwind to Paychex’s revenue growth.

If you are reading this post via an email subscription, you can click here to watch the interview.

As DR Horton surges on Q2 earnings beat, Sean Stannard-Stockton is bullish on US home builders including $NVR. What’s your take on the housing market in US? $DHI $LEN $PAYX@TanvirGill2 @WillKoulouris @IntrinsicInv pic.twitter.com/fe97UpMn5h

— CNBC’s Street Signs (@StreetSignsCNBC) April 21, 2023

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