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Comfort Zone Investing: Bigger Is Better -- Usually

Ted Allrich — Sat, 17 Apr 2010 10:30:00 EST

Filed under: Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Comfort Zone Investing

Big is big lately, as in Too Big To Fail headlines, referring to the biggest banks, ones like Citibank, (C) Chase (JPM), and Bank of America (BAC). They can't be allowed to fail, the reasoning goes, or faith will be lost in the banking system. If that faith goes away, so do all the banks. And there goes capitalism as we know it. Without banks lending money for homes and businesses, there is no growth, only shrinkage.

Big in banks has been helpful to the biggest names. Lehman wasn't quite big enough. It didn't get federal money to help bridge the gap between almost out of business and out of business. But Citi did. So did BofA. As did Chase. They all got bailed out. Crisis averted. Profits are coming back to these banks. They're repaying the TARP money, with interest. The government will sell its warrants that will add to the profitability of that decision. All's well that ends well.

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Comfort Zone Investing: Bigger Is Better -- Usually originally appeared on BloggingStocks on Sat, 17 Apr 2010 10:30:00 EST. Please see our terms for use of feeds.

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Cramer on BloggingStocks: Zombie homebuilders keep shuffling along

Jim Cramer — Wed, 04 Mar 2009 09:15:00 EST

Filed under: Market Matters, Centex Corp (CTX), D.R.Horton (DHI), Toll Brothers (TOL), Stocks to Sell, Housing, Cramer on BloggingStocks

From TheStreet.com Network

TheStreet.com's Jim Cramer says this group simply refuses to merge, so you can safely sell them all.

One look at Toll Brothers' (NYSE: TOL) (Cramer's Take) quarter today tells us we aren't there yet. They still have plenty of money. They still have plenty of cancellations. They still need a tax credit for more business, which we know they aren't going to get because this administration doesn't want it. No bottom. In fact, Toll and all the others are still where they were a year ago. Independent, hanging on.

Continue reading Cramer on BloggingStocks: Zombie homebuilders keep shuffling along

Cramer on BloggingStocks: Zombie homebuilders keep shuffling along originally appeared on BloggingStocks on Wed, 04 Mar 2009 09:15:00 EST. Please see our terms for use of feeds.

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New home sales fall by 37.8% from 2007 levels to lowest level on record

Lita Epstein — Thu, 29 Jan 2009 13:51:00 EST

Filed under: Bad News, Market Matters, Money and Finance Today, Housing, Financial Crisis

Sales of new homes fell by 37.8 percent from 2007 sales. Total sales in 2008 were 482,000 compared to 776,000 (the total sold in 2007), according to Mission Residential. The median new home price dropped by 9.3 on a a year-over-year basis.

These numbers may actually be skewed higher because the monthly sales data does not reflect cancellations, which means sales are probably lower and actual inventories higher. Because of these adjustments the actual supply on the market jumped to 12.9 months in December. Don't expect home builder stocks to recover any time soon.

Continue reading New home sales fall by 37.8% from 2007 levels to lowest level on record

New home sales fall by 37.8% from 2007 levels to lowest level on record originally appeared on BloggingStocks on Thu, 29 Jan 2009 13:51:00 EST. Please see our terms for use of feeds.

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Home construction hits record low - could be good news

Lita Epstein — Wed, 19 Nov 2008 13:45:00 EST

Filed under: Money and Finance Today, Economic Data, Housing, Financial Crisis

When you read the stories today about home construction hitting its lowest level since 1959, you probably think it's just more bad news -- but it's actually good news.

The only way we're going to even get near the bottom of the housing price drop is for the backlog of available homes to be sold. We'll only see prices start to climb back up when demand is higher than the available supply. We're still a long way off from that scenario, but if builders stop building, we'll get there a lot faster.

Based on the new numbers released today by the Commerce Department, the pace of new construction will put the U.S. on track to build the fewest new homes and apartments since the end of World War II. Commerce reported that construction of new homes and apartments dropped to 791,000 on an annual basis. Prior to today's report the slowest pace since World War II was in January 1991. This was the fourth straight monthly drop and I doubt it's the last one. There are still too many homes waiting to be sold.

The declines were led by a 31% drop in the Northeast and 13.7% drop in the Midwest. There were modest increases in the South (1.5%) and the West (7.5%). Given that the South and the West were the hardest hit at the beginning of the housing bubble burst, this could be good news that these hard hit areas are nearing their bottom.

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Home construction hits record low - could be good news originally appeared on BloggingStocks on Wed, 19 Nov 2008 13:45:00 EST. Please see our terms for use of feeds.

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Homebuilders get some help from Congress -- why?

Zac Bissonnette — Thu, 03 Apr 2008 10:10:00 EST

Filed under: Law, Housing

So our all-wise representatives in Congress got together to try to come up with some kind of response to the housing crisis -- this is an election year after all -- and here's what they came up with: tax breaks for home builders.

The $6 billion package will let homebuilders use losses from 2008 and 2009 to offset income in the previous four years, rather than the usual two.

It's hard to know where to begin in describing how incredibly idiotic this is but I like a good challenge. First of all, we're giving tax breaks to companies that got into this mess because of massive over-investment and oversupply. Aren't we supposed to use tax breaks to encourage investment in areas that need further investment, not the opposite? This just makes no sense.

Why this is stupid, part two: These handouts may allow builders to avoid distressed sales which could have presented a fabulous, once in a lifetime opportunity for first-time home buyers to gain their piece of the American Dream. Instead of allowing regular people to capitalize on big business' blunders, our government has stepped in and used taxpayer money to keep the builders happy. That's stupid, and it's also wrong.

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Homebuilders get some help from Congress -- why? originally appeared on BloggingStocks on Thu, 03 Apr 2008 10:10:00 EST. Please see our terms for use of feeds.

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Home builders show their desperation

Zac Bissonnette — Wed, 06 Feb 2008 14:38:00 EST

Filed under: KB HOME (KBH), Housing, Recession

Have home builders got an offer for you: sign a contract to buy a home and, if comparable homes in the area decline in value before closing, you can have the home at a reduced price.

According (subscription required) to the Wall Street Journal, companies including KB Home (NYSE: KBH) and Ryland Group (NYSE: RYL) hope such "price protection" guarantees will lessen consumers' paralyzing fears about buying real estate whose value is falling and get them sign on the dotted line, bring in much-needed cash and reduce high cancellation rates.

KB will roll out its price protection program in 35 markets this month. The move is an effort to move some impossible-to-sell new houses, and try to toss buyers a bone that will keep them from walking away from their down payments.

As an investor, I wonder whether this a sign of absolute desperation on the part of home builders, or is it a more bullish indicator that executives don't feel there's much risk in assuaging customers' fears with an offer to compensate them if the home declines in value before closing.

I would say the first option seems more likely.

Home builders show their desperation originally appeared on BloggingStocks on Wed, 06 Feb 2008 14:38:00 EST. Please see our terms for use of feeds.

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Lowe's survives housing downturn just fine

Jonathan Berr — Fri, 23 Feb 2007 08:43:00 EST

Filed under: Earnings Reports, Forecasts, Good news, Consumer Experience, Home Depot (HD), Columns, Lowe's Cos (LOW), Toll Brothers (TOL), Economic Data

How does Lowe's Cos Inc. (NYSE:LOW) report better-than-expected earnings during a housing slump? Maybe it has something to do with the fact that its stores are pleasant places to shop.

Net income was $613 million, or 40 cents a share, compared $693 million, or 43 cents, a year earlier. Sales fell 3.7 percent to $10.4 billion. Comparable store sales fell 5.3 percent. Analysts were expecting profit of 37 cents on revenue of $10.36 billion, according to Thomson Financial.

The company gave pretty robust guidance for both the current quarter and the fiscal year.

It expects earnings in the fiscal first quarter of between 49 cents and 51 cents. Sales are expected to rise 5 to 6 percent. Wall Street expectations were for earnings of 51 cents and revenue of $12.46 billion, up 4.5 percent from a year earlier.

Lowe's forecasted profit for the fiscal year ending February 1, 2008 of between $2.02 to $2.09 and a 10 percent sales increase. That compares with analysts' forecasts of $2.03 on revenue of $50.4 million, up 7.6 percent, Thomson Financial said.

In the company's earnings press release, Chief Executive Robert Niblock was almost giddy with optimism. He's got good reason. Consumers continue to leave Home Depot Inc. (NYSE:HD) for his stores. In addition, if people aren't buying Toll Brothers Inc. (NYSE:TOL) McMansion, they are going to want to fix up their existing homes.

"We achieved clear market share gains in many categories and a 12.3 percent increase in net earnings, while positioning the business for long-term growth," he said. "We are encouraged by indications that our sales trends have bottomed. As a result, we believe our comparable store sales performance will gradually improve throughout 2007."

Also check out some other earnings reports that we're following, and let us know what you're expecting.

Lowe's survives housing downturn just fine originally appeared on BloggingStocks on Fri, 23 Feb 2007 08:43:00 EST. Please see our terms for use of feeds.

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