24/7 Wall St. » DHI

24/7 Wall St. Closing Bell (GE, FFIV, GRPN, PGR, REGN, CHKP, COP, DHI, ETN, HAS, PCH, XRX, AMLN, LSI)

Paul Ausick — Mon, 23 Apr 2012 20:04:36 +0000

Markets opened lower this morning following some reversals in Europe, not the least of which is the coming French presidential election. PMI readings from Europe and China were also weak. Asian and European markets were lower across the board today as well. The US dollar index rose today, now up 0.27% at 79.409. The GSCI commodity index is up 0.05% at 676.38, with commodities mixed, though orange juice is down more than -5%. WTI crude oil closed down -1.3% at $102.49/barrel, and Brent crude trades down -0.12% at $118.62/barrel. Gold settled down -0.06% today, at $1,632.60/ounce.

The unofficial closing bells put the DJIA fell more than 102 points to 12,926.86 (-0.79%), the NASDAQ fell 30 points (-1%) to 2,970.45, and the S&P 500 fell -0.84% or more than 11 points to 1,366.94.

There were several analyst upgrades and downgrades today, including General Electric Co. (NYSE: GE) reiterated ‘outperform’ with a $22 target price at Credit Suisse; F5 Networks Inc. (NASDAQ: FFIV) started as ‘overweight’ at Morgan Stanley; Groupon Inc. (NASDAQ: GRPN) raised to ‘overweight’ at Evercore; Progressive Corp. (NYSE: PGR) cut to ‘neutral’ at Citigroup; and Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) reiterated as ‘buy’ and target price raised to $146 at BofA/ML.

Earnings reports since markets closed last Friday have led to some price changes as of the last half hour of trading today: Check Point Software Technologies Ltd. (NASDAQ: CHKP) is down -5.1% at $60.77; ConocoPhillips (NYSE: COP) is down -0.6% at $72.44; D.R. Horton Inc. (NYSE: DHI) is down -2.1% at $15.06 (our coverage here); Eaton Corp. (NYSE: ETN) is down -0.15% at $47.37; Hasbro Inc. (NYSE: HAS) is down -5% at $34.11; Potlach Corp. (NYSE: PCH) is down -1.7% at $30.53; and Xerox Corp. (NYSE: XRX) is up 0.32% at $7.90.

Other standouts from today include the following stocks:

Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) is up 14.2% at $26.17 after posting a new 52-week high this morning of $26.25. The company has hired advisers for a possible sale of the company. More coverage here and here.

LSI Corp. (NYSE: LSI) is up 1% at $8.01. The semiconductor maker got a boost from a story in Barron’s magazine over the weekend. More coverage here.

Stay tuned for Tuesday. The Federal Reserve Open Market Committee begins its two-day meeting. We have noted the following events on the schedule (all times Eastern):

9:00 a.m. – S&P Case-Shiller housing price index
10:00 a.m. – New home sales
10:00 a.m. – Conference board consumer confidence
10:00 a.m. – FHFA house price index
10:00 a.m. – Richmond Fed manufacturing index
11:30 a.m. – 4-week bill auction
1:00 p.m. – 2-year note auction

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AMLN, CHKP, COP, DHI, ETN, FFIV, GE, GRPN, HAS, LSI, PCH, PGR, REGN, XRX

Homebuilder Horton Beats Estimates, Expects Full-year Profit (DHI, PHM, LEN, HOV, TOL, NVR, KBH, XHB)

Paul Ausick — Mon, 23 Apr 2012 13:35:35 +0000

Hopes for a recovery in homebuilding have picked up recently, primarily as a result of pent-up demand for new household formation. All those college grads who moved back in with their parents are supposedly getting jobs and looking to move out. Same for families that have doubled up with relatives and friends.

The country’s largest homebuilders have been improving a little in the first quarter, and that improvement is expected to increase in the second half of the year. D.R. Horton Inc. (NYSE: DHI), PulteGroup Inc. (NYSE: PHM), Lennar Corp. (NYSE: LEN), Hovnanian Enterprises Inc. (NYSE: HOV), Toll Brothers Inc. (NYSE: TOL), NVR Inc. (NYSE: NVR), KB Home (NYSE: KBH) and other builders still face headwinds from falling prices as distressed sales continue.

Last week’s report from the National Association of Realtors indicated that existing inventories have continued to decline, a good sign for homebuilders. There has been a large increase in sales of existing homes to investors and private equity firms who plan to rent out the homes to all those new households. As the inventory declines, prices could begin to rise again, until those homeowners who want to sell finally see their chance (call it ‘pent-up supply’).

D.R. Horton, which released its quarterly results today, posted better than expected EPS and revenue, with EPS coming in a $0.13 on total revenue of $935.6 million. The consensus estimates had called for EPS of $0.04 on revenue of $853.4 million. Horton’s sales, closings, and backlog all finished the quarter with double-digit growth year-over-year. That’s fine, of course, but the market for new houses in the first quarter of last year was pretty awful, so that puts some perspective on this year’s spurt.

Here’s a quick look at the other builders and their most recent reports and expectations for the next quarter.

PulteGroup Inc. (NYSE: PHM) is scheduled to report earnings on Thursday. The consensus estimate calls for an EPS loss of -$0.03 on sales of $836.6 million. In the same period a year ago the company posted an EPS loss of -$0.10. PulteGroup is currently expected to post EPS of $0.04 in its June quarter and full-year EPS of $0.22, with about half that expected in the third quarter. The company’s shares are up nearly 33% since January and up 7.6% for the last 12 months.

Lennar Corp. (NYSE: LEN) posted EPS of $0.08 for its quarter ended in February, double the consensus estimate. For the quarter ending in May, the company is expected to put up EPS of $0.17 on revenue of $883.8 million, and for the full year, EPS is forecast at $0.83. PulteGroup’s shares are up about 31% since the beginning of the year and up more than 36% in the past year.

Hovnanian Enterprises Inc. (NYSE: HOV) has had a rough few years. In its most recent quarter, the company posted an EPS loss of -17% and the consensus estimate for the quarter ending in April is for an EPS loss of -$0.32. For the full-year the company is expected to post an EPS loss of -$1.02. Year-to-date shares are up about 37%, but for the past 12 months shares have lost nearly -44%.

Toll Brothers Inc. (NYSE: TOL) posted an EPS loss of -$0.02 in its January quarter, but the consensus estimate for the April quarter calls for EPS of $0.03. For the full-year, the forecast is for EPS of $0.33, with about half of that coming in the company’s fourth quarter. Year-to-date and for the past 12 months Toll Brothers is up about 17%.

NVR Inc. (NYSE: NVR) reported first quarter EPS of $3.90 last week, below the consensus estimate of $4.16. For the June quarter the company is expected to show EPS of $8.80 and for the full year EPS is expected to come in at $33.87. NVR’s shares are up about 12.8% since the beginning of the year, and for the past 12 months shares are up 6.7%.

KB Home (NYSE: KBH) reported an EPS loss of -$0.59 in its first quarter, about 2.5x the consensus estimate. For the May quarter the EPS loss is estimated to be -$0.33, an improvement of nearly 60% from the same period a year ago. KB Home’s shares are up 16.8% year-to-date, but off more than -31% in the past 12 months.

D.R. Horton opened up 1.5% this morning, at $15.61 in a 52-week range of $8.03-$16.45.

The S&P Homebuilders ETF (AMEX: XHB) opened lower this morning at $20.23 in a 52-week range of $12.22-$21.98.

Paul Ausick

Filed under: Earnings, Housing Tagged: DHI, HOV, KBH, LEN, NVR, PHM, TOL, XHB

Fears of a New Housing Peak? (LEN, KBH, DHI, PHM, TOL, HD, LOW)

Administrator — Mon, 16 Apr 2012 16:17:51 +0000

The housing market is supposed to be doing better and the lack of a new recession is supposed to have helped to put in a floor under what had been consistently falling house prices. Even the sub-prime activity is supposedly getting a bit more interest. So why did homebuilder confidence take an unexpected dive in April?

The National Association of Home Builders reported that home builder confidence dropped to 25 from the prior month’s reading of 28 and that marked the first drop in seven months. Dow Jones was calling for a reading of 28 and Bloomberg was calling for a 1 point gain to 29 in April.

Here is where the problem is: the stronger interest from consumers has not matured into many more deals closing. Buyers are still having trouble closing on a mortgage and some buyers are opting out ahead of a deal closing. Investors also need to be aware that it takes a reading of 50 before the general consensus is that housing is considered favorable versus cautious and we are now going on six-years of the negative readings.

Lennar Corp. (NYSE: LEN) is down 1.6% at $25.69; KB Home (NYSE: KBH) is down 1.3% at $7.95; DR Horton Inc. (NYSE: DHI) is down 1.2% at $14.66; and PulteGroup, Inc. (NYSE: PHM) is down 1.3% at $8.43. Toll Brothers Inc. (NYSE: TOL) is today’s standout stock with a gain of 2.5% at $23.51.

There is another problem here with the reading in that all three components of the index were lower. Traffic was ratcheted down, as was current sales and future sales expectations. Today’s news does need to be segregated from the entire housing market. Builders are competing with existing home sales and with foreclosures or other distressed housing sales.

Mortgage rates are still close to record lows. That cannot last forever and at some point you would have to ask what happens to the affordability if the 30-year mortgage rates rose 100 or 150 basis points.

To prove that the housing market may be fragmented despite the drop in builder sentiment, take a look at the retail segment: The Home Depot, Inc. (NYSE: HD) is up almost 1% at $51.45 and it hit a 52-week high of $51.80 today. Lowe’s Companies, Inc. (NYSE: LOW) is up 0.7% at $31.90 and shares also hit a new year high as well.

Builders may be pessimistic, but they are competing with the existing home sales perhaps harder than ever now.

JON C. OGG

Filed under: Economy, Housing Tagged: DHI, HD, KBH, LEN, LOW, PHM, TOL

PulteGroup Sinks Homebuilders Shares (PHM, DHI, KBH, MHO, XHB)

Paul Ausick — Thu, 29 Mar 2012 14:57:50 +0000

Homebuilder PulteGroup Inc. (NYSE: PHM) is leading homebuilding stocks into another trough today following a downgrade from S&P Capital IQ to ‘Strong Sell’. MarketWatch cites an analyst’s comment on Pulte that likely applies to the entire homebuilding group:

We expect foreclosure activity to pick up as the year progresses, adding additional pressure to prices and new home sales. We think growth in housing will be muted, below consensus expectations.

Homebuilders like Pulte, D.R. Horton Inc. (NYSE: DHI), KB Home (NYSE: KBH), and M/I Homes Inc. (NYSE: MHO) are all up between 22% and nearly 44% since the beginning of the year, with most peaking in mid-March. The SPDR S&P Homebuilders ETF (NYSE: XHB) is also up nearly 25% so far this year. Today, all are down more than -3.5% on the CapIQ note.

Shares of PulteGroup are down -5% at $9.00 in a 52-week range of $3.29-$9.69. That 52-week high was set just two days ago, on an earnings report from another homebuilder that sent most sector stocks to or near annual highs, even though the S&P Case-Shiller housing price index came out on the same day with a poor report on house prices.

Paul Ausick

Filed under: Analyst Calls, Housing Tagged: DHI, KBH, MHO, PHM, XHB

Homebuilders Rally, Ignore Case-Shiller Drop (LEN, PHM, BZH, DHI)

Paul Ausick — Tue, 27 Mar 2012 19:13:08 +0000

This morning’s report on the S&P Case-Shiller housing price index indicated that housing prices continue to fall in the US (our coverage here). Shortly before the January data was released, homebuilder Lennar Corp. (NYSE: LEN) posted better-than-expected earnings and revenues for its first fiscal quarter (our coverage here).

With about an hour to go in today’s trading session, the good news from Lennar is lifting other homebuilders including PulteGroup Inc. (NYSE: PHM), Beazer Homes USA Inc. (NYSE: BZH), and D.R. Horton Inc. (NYSE: DHI). Lennar noted that it had been able to increase its sales prices in the quarter ended in February, in almost complete opposition to the Case-Shiller index.

What could be happening is that we’re seeing a mismatch based on reported data. The Case-Shiller index includes data only through January, while Lennar’s quarterly results go through February. Most of the data on housing starts points to better news in the second half of the year, so what we might have here is a homebuilder front-running the price index.

Whatever’s happening, homebuilders look good today. Lennar is up nearly 5% at $27.66 after posting a new 52-week high earlier today of $28.28. PulteGroup is up about 4.7% at $9.20 in a 52-week range of $3.29-$9.69. Beazer is up about 4.4% at $3.45 in a 52-week range of $1.35-$4.79, and D.R. Horton is up 3.7% at $16.00 in a 52-week range of $8.03-$16.45.

Paul Ausick

Filed under: Housing Tagged: BZH, DHI, LEN, PHM

24/7 Wall St. Closing Bell (JNJ, KSS, WTW, DHI, LEN, TOL, ACI, ALIM, ZUMZ, ARO, ANN, CCL, FGP, HALO, URRE, JVA, QSFT, ASTM, DYN, ZGNX, GMCR)

Paul Ausick — Fri, 09 Mar 2012 21:05:53 +0000

US equities opened higher this morning following the report on a US non-farm payroll gain of 227,000 jobs (more coverage here). In Europe, the Greek debt swap deal went off smoothly, but the declaration late this afternoon by the International Swaps and Derivatives Association (ISDA) that the swap was, in fact, a “credit event” sent stocks down sharply though the three major indexes remain in positive territory about half an hour before the markets close. The dollar opened up this morning and got stronger as the day went on, with the dollar index now up 1.07% at 79.987. Crude oil was up today, with WTI crude settling up 0.8% at $107.40/barrel and Brent crude trading up 0.29% at $125.80/barrel. Gold settled higher by 0.8% at $1,711.50/ounce.

The unofficial closing bells put the DJIA up 14 points to 12,921.94 (0.11%), the NASDAQ rose nearly 18 points (0.6%) to 2,988.34, and the S&P 500 rose 0.36% or nearly 5 points to 1,370.87.

There were several analyst upgrades and downgrades today, including Johnson & Johnson (NYSE: JNJ) started as ‘hold’ at Jefferies; Kohl’s Corp. (NYSE: KSS) raised to ‘buy’ at Jefferies; Weight Watchers International Inc. (NYSE: WTW) started as ‘overweight’ (!) at Barclays; D.R. Horton Inc. (NYSE: DHI), Lennar Corp. (NYSE: LEN), and Toll Brothers Inc. (NYSE: TOL) all raised to ‘outperform’ at Credit Suisse; and Arch Coal Inc. (NYSE: ACI) cut to ‘market perform’ at BMO.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Alimera Systems Inc. (NASDAQ: ALIM) is down -3.4% at $4.00; Zumiez Inc. (NASDAQ: ZUMZ) is up 5.7% at $34.16 after posting a new 52-week high of $34.44 earlier today; Aeropostale Inc. (NYSE: ARO) is up 2.6% at $19.45; Ann Inc. (NYSE: ANN) is up 6% at $27.36; Carnival Corp. (NYSE: CCL) is down -1.2% at $30.57 (more coverage here); Ferrellgas Partners LP (NYSE: FGP) is down -2.6% at $16.80; Halozyme Therapeutics Inc. (NASDAQ: HALO) is down -1.8% at $11.30; and Uranium Resources Inc. (NASDAQ: URRE) is up 3.1% at $1.00.

Other standouts from today include the following stocks:

Coffee Holding Co. Inc. (NASDAQ: JVA) is up nearly 38% at $10.81. The integrated coffee roaster and distributor posted better-than-expected quarterly results this morning.

Quest Software Inc. (NASDAQ: QSFT) is up more than 24% at $24.09. The firm has agreed to be acquired at $23/share. More coverage here.

Aastrom Biosciences Inc. (NASDAQ: ASTM) is up more than 21% at $2.21. The biotechnology company has completed a private placement of $40 million in Series B convertible preferred stock. More coverage here.

Dynegy Inc. (NYSE: DYN) is down more than -38% at $0.72 after posting a new 52-week low of $0.59 earlier today. A Delaware court ruled that the company had engaged in a “fraudulent transfer” of assets prior to its bankruptcy filing.

Zogenix Inc. (NASDAQ: ZGNX) is down nearly -18% at $2.05. The drug maker posted a wider than expected loss after the markets closed yesterday.

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is down nearly -16% at $52.61. The company is being hit hard by yesterday’s announcement from Starbucks Inc. (NASDAQ: SBUX) that it will launch a single-cup espresso and coffee machine to compete with the Keurig products from Green Mountain. More coverage here and here.

Stay tuned for Monday. We have noted the following events on the schedule (all times Eastern):

11:30 a.m. – 3- and 6-month Treasury bill auction
1:00 p.m. – 3-year Treasury note auction
2.00 p.m. – US Treasury budget report

Have a great weekend.

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: ACI, ALIM, ANN, ARO, ASTM, CCL, DHI, DYN, FGP, GMCR, HALO, JNJ, JVA, KSS, LEN, QSFT, TOL, URRE, WTW, ZGNX, ZUMZ

Top Analyst Upgrades & Downgrades (ACI, CAB, CHL, DKS, DHI, GFIG, GMCR, HLF, JNJ, KBH, KSS, LEN, LPNT, MDT, TOL, WTW)

Administrator — Fri, 09 Mar 2012 13:20:08 +0000

These are some of this Friday’s top analyst upgrades, downgrades, and initiations seen in Wall Street research calls.

Arch Coal, Inc. (NYSE: ACI) Cut to Market Perform at BMO.

Cabela’s, Inc. (NYSE: CAB) named as Bull of the Day at Zacks.

China Mobile Limited (NYSE: CHL) Raised to Buy at Goldman Sachs.

Dick’s Sporting Goods Inc. (NYSE: DKS) Started as Buy at Argus.

D.R. Horton (NYSE: DHI) Raised to Outperform at Credit Suisse.

GFI Group (NASDAQ: GFIG) Raised to Outperform at Keefe Bruyette & Woods.

Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) Cut to Neutral at BofA/ML.

Herbalife Ltd. (NYSE: HLF) Started as Overweight at Barclays.

Johnson & Johnson (NYSE: JNJ) Started as Hold at Jefferies.

KB Home (NYSE: KBH) named Bear of the Day at Zacks.

Kohl’s Corporation (NYSE: KSS) Raised to Buy at Jefferies.

Lennar Corporation (NYSE: LEN) Raised to Outperform at Credit Suisse.

LifePoint Hospitals, Inc. (NASDAQ: LPNT) Started as Buy at Cantor Fitzgerald.

Medtronic, Inc. (NYSE: MDT) Cut to Sell at Argus.

Toll Brothers Inc. (NYSE: TOL) Raised to Outperform at Credit Suisse.

Weight Watchers International Inc. (NYSE: WTW) Started as Overweight at Barclays.

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox. We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: ACI, CAB, CHL, DHI, DKS, GFIG, GMCR, HLF, JNJ, KBH, KSS, LEN, LPNT, MDT, TOL, WTW

US Home Prices Fell in November (PHM, KBH, DHI)

Paul Ausick — Mon, 09 Jan 2012 16:31:26 +0000

US home prices fell -1.4% month-over-month in November and -4.3% year-over-year according to the latest report from research firm CoreLogic. The year-over-year drop in October was -3.7%. The declines come following some reasonably encouraging news for homebuilders like PulteGroup Inc. (NYSE: PHM), KB Home (NYSE: KBH), DR Horton Inc. (NYSE: DHI), and others.

Excluding sales of distressed homes, that is short sales and real-estate owned properties, prices declined -0.6% year-over-year in November, compared with a decline of -1.6% in October.

Including distressed sales, the biggest price drops occurred in Nevada (-11.2%), Illinois (-9.7%), Minnesota (-7.8%), Georgia (-7.7%) and Ohio (-7.2%). Excluding distressed sales, the largest declines occurred in Nevada (-8.8%), Arizona (-4.9%), Minnesota (-4.7%), Idaho (-4.1%) and Georgia (-3.6%)

Some states are showing home price appreciation as well. Including distressed sales, home prices improved the most in Vermont (+4.3%), South Carolina (+2.8%), District of Columbia (+2.1%), Nebraska (+1.9%) and New York (+1.7%). Excluding distressed sales, the five states showing the greatest price appreciation were Maine (+4.9%), South Carolina (+4.9%), Montana (+3.8%), Indiana (+3.3%) and Louisiana (+2.4%).

Paul Ausick

Filed under: HI/LOW, Housing, Research Tagged: DHI, KBH, PHM

Case-Shiller Report… Housing Pain Remains (KBH, DHI, TOL, LEN, PHM)

Paul Ausick — Tue, 27 Dec 2011 15:14:19 +0000

The monthly S&P/Case-Shiller Home Price Indices for the month of October were released this morning, and the results failed to meet already low expectation. The annual decline in home prices in the 10- and 20- metropolitan regions measured by the indices fell -3.0% and -3.4%, respectively. A median forecast had predicted a drop of -3.2% in the 20-city index. For just the month of October, home prices fell in both indices by more than -1% compared with September prices.

Recent earnings and forecasts from builders like KB Home (NYSE: KBH), D.R. Horton Inc. (NYSE: DHI), Toll Brothers Inc. (NYSE: TOL), Lennar Corp. (NYSE: LEN), and PulteGroup Inc. (NYSE: PHM) have been mixed, but the trend has been slightly positive for the first time in many quarters.

In the 20-city Case-Shiller index, the one-year decline in Atlanta was worst, at -11.7%, followed by Las Vegas at -8.5% and Minneapolis at -8.4%. The two cities posting one year price gains in October were Detroit, up 2.5%, and Washington, D.C., up 1.3%.

Only one city, Phoenix, posted a month-over-month gain in October, and that gain was a mere 0.3%. The largest decline month-over-month came in Atlanta, at -5%, with Detroit falling -3.3% in the month.

The Case-Shiller indices indicate a couple of things. First, the impact of foreclosed properties still weighs on home prices. And as more foreclosed properties hit the market now that lenders are ending their self-imposed moratorium on foreclosures, more pressure is expected on home prices.

Second, the recent good news on new orders and inventory levels from home builders could be more transient than many had hoped. Even the expected improvements in homebuilding were slight, and remained near recent lows.

Home prices have returned to their level in mid-2003, and the 20-city recovery from its most recent low in March 2011 is up 1.9%. That’s barely better than nothing.

Paul Ausick

Filed under: Economy, Housing Tagged: DHI, KBH, LEN, PHM, TOL

Are Homebuilders, Home Improvement Stores Coming Back? (NVR, TOL, PHM, HOV, DHI, BZH, HD, LOW)

Paul Ausick — Wed, 07 Dec 2011 17:31:20 +0000

Stocks in homebuilders have been down so low for so long that almost anything look like up. Recent earnings releases have indicated that new orders are improving, but much of the improvement is tenuous and could easily be wiped out by cancellations. We’ve reviewe six builders — NVR Inc. (NYSE: NVR), Toll Brothers Inc. (NYSE: TOL), PulteGroup Inc. (NYSE: PHM), Hovnanian Enterprises Inc. (NYSE: HOV), D.R. Horton Inc. (NYSE: DHI), and Beazer Homes USA Inc. (NYSE: BZH) — to see if there is any upside potential in these stocks, and included The Home Depot Inc. (NYSE: HD) and Lowe’s Cos. Inc.(NYSE: LOW), which may be better bets.

Among the six homebuilders, only NVR had a significant jump in its target price since mid-October. The median target price for NVR is now $765, up from $728, and the stock price as of about noon today is $682.57, for an upside potential of 12.1%. That’s not a grand number, but it’s the best in the sector. Target prices for PulteGroup, D.R. Horton, Hovnanian, and Beazer did not change and the target price for Toll Brothers rose just $0.15, from $21.50 to $21.65. Not a big display of confidence in the sector.

Home Depot’s median target price rose from $40.00 to $42.00, and the stock’s current price of $40.51 implies a potential gain of 3.7%. Lowe’s median target price rose from $23.00 to $26.00, and at the current price of $25.13 the implied gain is 3.5%. Even though now is not a particularly good season for home improvement projects, either one or both of these stores could easily push through the new targets.

While the target prices did not change for five of the homebuilders, all but NVR saw share price gains of more than 30% in the last six weeks, with PulteGroup shares gaining 51%. Home Depot and Lowe’s shares are up 16% and 19%, respectively, in the same period. These share price rises for homebuilders indicate more investor interest in these stocks, analysts’ lack of enthusiasm indicates that caution remains the best policy.

None of these builders pays a dividend, with the exception of Beazer which offers investors a dividend yield of 1.2%. Home Depot’s dividend yield is 2.9%, and Lowe’s offers a dividend yield of 2.3%.

For investors who believe they have to participate in this sector, Home Depot remains the best choice, with Lowe’s the best alternative. Building — and selling — new houses is still a risky business.

Paul Ausick

Filed under: Analyst Calls, Housing, Value Investing Tagged: BZH, DHI, HD, HOV, LOW, NVR, PHM, TOL