"Following a record low reading for new home sales, you might think now is the worst time to bet on a housing recovery," says Lou Basenese.

The editor of the Small Cap and Special Situations Report asserts, "Think again. The aftermath of such disappointing news represents an ideal contrarian opportunity.

And one such opportunity is Avatar Holdings (AVTR), which ranks as a buy even by Ben Graham's strict value criteria.

Continue reading Avatar Holdings (AVTR): A Ben Graham-Style Housing Value

Avatar Holdings (AVTR): A Ben Graham-Style Housing Value originally appeared on BloggingStocks on Mon, 12 Jul 2010 13:00:00 EST. Please see our terms for use of feeds.

Homeowners lost $3.3 trillion in the value of their houses last year. A report from Zillow.com, picked up by Bloomberg, said that national home prices dropped 11.6% compared to 2007.

That makes stocks like Hovnanian (NYSE: HOV) and Beazer (NYSE: BZH) sells, even at current depressed levels. HOV shares are down to $1.64 from a 52-week high of $13.50. Beazer is off from a high of $12.40 to $0.98. The company could even face delisting over the next year if it cannot get its share price up.

There is a temptation to think that home-building stocks are so inexpensive that, if the companies can drop inventory prices enough, they can start to improve sales, even if the margins on each home sold are poor. But it is not that simple.

Continue reading New data: No recovery in home-building stocks

New data: No recovery in home-building stocks originally appeared on BloggingStocks on Tue, 03 Feb 2009 12:45:00 EST. Please see our terms for use of feeds.

The homebuilding sector collapse has been longer and deeper than even the most pessimistic expected. Prices continue to fall and foreclosures keep rising. With so much supply on the market, the end does not seem near.

The result of the carnage will be a change in behavior that always comes with crisis. The biggest trend I see happening will be with respect to new construction, or, shall we say, the lack thereof.

Homebuilders are operating at historically low levels, meaning less supply on the market. But the assumption that demand for new homes will magically reappear once that supply dissipates is erroneous. Instead, look for homeowners to focus on making do with current stock.

Continue reading Can Home Depot rebuild?

Can Home Depot rebuild? originally appeared on BloggingStocks on Tue, 27 Jan 2009 11:25:00 EST. Please see our terms for use of feeds.

Are you waiting for the malaise in the housing market to finally lift? Of course you are, who isn't? I can't wait for the day when headline news suddenly turns unambiguously positive. And I can't wait for the day when the market as a whole decides to anticipate it. For now, though, we've still got sour data to contend with. According to this article, famous luxury home-builder Toll Brothers (NYSE: TOL), whose competitors include Centex (NYSE: CTX) and Lennar (NYSE: LEN), reported preliminary results for the third quarter on Wednesday that showed a big decrease in home-building revenues. They decreased 34%, coming in at roughly $796 million. Seems par for the course, all things considered.

But there are more declines. Backlog orders decreased over 50%, and net signed contracts took a dive of 35% (both of these metrics are in dollar terms). The company is also issuing write-downs that will fall somewhere between $100 million and $200 million. Depressing stats, but according to the company press release, CEO Robert I. Toll believes that there is pent-up demand lurking out there in the marketplace for homes and he used the fact that total cancellations were down during the quarter as a tool for positive spin. Plus, the home-building revenue number did, in fact, beat estimates, according to Reuters. Does this make me want to run out and buy the stock?

No. Even though the stock has been strong in the last month, and even though it was up nearly 1% at the end of the trading session on Wednesday (a pretty nice showing on an otherwise overall downer of a day), I don't think I'm ready to initiate a position in Toll Brothers. I'd have to see a significant pullback in this one before my interest becomes piqued (some better economic news wouldn't hurt, either).

Disclosure: I don't own any company mentioned; positions can change at any time.

Toll Brothers issues preliminary results -- should you stay away from the stock? originally appeared on BloggingStocks on Thu, 14 Aug 2008 08:41:00 EST. Please see our terms for use of feeds.

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"Homebuilders have been in a slump, to say the least," says Jim Farrish, editor of Sector Exchange.

"The technical charts on homebuilders look very similar to those of technology stocks during their rise from 1998-2000. In fact, the index has declined more than 70% peak to trough. Looking toward 2008 and the housing market, we could start to see a turnaround.

"The start is likely to be government aided, which is why we like this as an aggressive play, as the Federal government will put more money into fixing something than corporate America. Current proposals will not come close to fixing it, but will at least put a band aid on the situation and allow the healing process to begin.

"Our vote to benefit here would be Toll Brothers (NYSE: TOL). The company has one of the better-looking balance sheets in the industry and management has done a fairly good job of dealing with this downside market.

Continue reading Best Stocks for 2008: Housing woes take a toll on Toll Brothers (TOL)

Best Stocks for 2008: Housing woes take a toll on Toll Brothers (TOL) originally appeared on BloggingStocks on Thu, 20 Dec 2007 10:30:00 EST. Please see our terms for use of feeds.

John Bollinger is among the industry's most respected technical analysts. In the "Contrary Corner" of his Capital Growth Letter, the advisor suggests scaling into a package of three home building stocks.

He explains, "For this exercise, I've looked at 20 home building stocks, each stock based on its monthly charts. Yes, I know that seems like a sacrilege in the day and age of hyperactive short-term trading, but we are taking the long view here.

"I then looked at the percentage drop from the stock's most recent swing high and then the number of months from the peak to the trough or the present if a swing low has not been established. I then looked to determine if there is a swing low in place.

"After reviewing these 20 homebuilding stock, I've chosen 3 candidates to start. I like the idea of selecting a fair number of small positions that add up to a normal sized position, then eliminating the non-performers as time passes while keeping the winners. We are choosing WCI Communities (NYSE: WCI), Standard Pacific (NYSE: SPF) and St. Joe (NYSE: JOE) as our first commitments."

Each day, Steven Halpern's TheStockAdvisors.com features the latest stock picks and investment ideas from the nation's leading financial newsletter advisors.

John Bollinger: A contrary bet on homebuilders originally appeared on BloggingStocks on Mon, 15 Oct 2007 16:33:00 EST. Please see our terms for use of feeds.

"While others are waiting for the next shoe to drop in the stock markets, I believe that the bottom is in," says technical expert Yola Edwards. Meanwhile, in The Internet Wealth Builder she has found a stock that she likes within "the rubble of the U.S. housing market." The stock? KB Home (NYSE: KBH).

Edwards explains, "I'm not saying that the subprime issue isn't significant, but I do believe that it is now priced into the market. It appears that the worst is over for the Dow Jones Industrial Average as well."

A technician by trade, she points out that the market is drastically oversold and the index has traced out a multi-year inverted head and shoulders pattern. Based on this pattern, she notes, a minimum upside target of 14,500 should be expected.

Meanwhile, for those comfortable with an out-of-favor, contrarian play, she sees both fundamental and technical opportunity in the shares of KB Home, a Los Angeles-based builder of single-family homes.

She notes, "Given what's been happening in the U.S. housing market, it should come as no surprise that the current financials are poor. KB Home has seen domestic sales battered by the housing downturn, which has been exacerbated in recent months by tightened lending standards by banks."

Continue reading Technician sees KB Home (KBH) building value

Technician sees KB Home (KBH) building value originally appeared on BloggingStocks on Fri, 07 Sep 2007 09:55:00 EST. Please see our terms for use of feeds.

Just prior to market's sharp decline, Peter Way cautioned his readers, "There are increasing odds that some market-wide bad times are ahead, and may be getting closer."

Unlike many advisors whose forecasts are based on highly subjective criteria, Way's prediction was based on a specific set of factors that he monitors -- the trading activities of institutional market makers, the positions they establish for their "big fund" clients, and the insurance they take out to hedge these positions. It's a fascinating strategy for more sophisticated investors.

Here, in his Block Trader ETF Monitor he explains, "For some time now, the million-dollar market-makers have sensed that their big fund clients are prepared to flee at a moment's notice. And they know that the exit door is only just so big. Nowhere big enough to let them all through.

Continue reading Big money market makers bet on homebuilders and internets

Big money market makers bet on homebuilders and internets originally appeared on BloggingStocks on Tue, 13 Mar 2007 13:04:00 EST. Please see our terms for use of feeds.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Ryland Group Inc. (NYSE: RYL) is the favorite conservative pick from John Stewart, editor of The Leverage Alert. He notes, "The company, which builds homes and finances mortgages, is seeing its stock start to display positive price action, although many experts are calling for a broader and deeper housing correction.

"Much of the doom and gloom toward the sector seems to have already been priced into these housing stocks as even negative news seems to be shrugged off. RYL's technical picture now looks quite strong as it is trading well above key moving averages, such as its 80-day. Meanwhile, shorter-term moving averages such as its 10-day trendline have provided support for the security during its recent run higher.

"Despite the stock's strength, ample skepticism exists from the Street. Ample pessimism is evident in our quantitative sentiment indicators as well. Options players are quite heavily skewed toward the bearish side of the spectrum.

"A number of traders are betting against the stock by shorting the shares as well. The total number of shares sold short amounts to nearly 20% of the stock's float. As the shares continue their advance, these short sellers may be forced to buy back their pessimistic positions. This could further exacerbate the magnitude of the homebuilder's upside potential as the bears unwind their short positions."

To see John's top speculative pick for 2007, click here.

Top Picks 2007: Stewart is at home with homebuilder Ryland originally appeared on BloggingStocks on Thu, 28 Dec 2006 08:30:00 EST. Please see our terms for use of feeds.

Cramer says sell alt.energy names, buy CROX originally appeared on BloggingStocks on Mon, 25 Sep 2006 14:49:00 EST. Please see our terms for use of feeds.