"MGIC (MTG) is the leading U.S. private mortgage insurer; in fact, the company claims to have founded the mortgage insurance industry in 1957," notes turnaround specialist George Putnam.

The editor of The Turnaround Letter explains, "After many years of relatively steady earnings, MGIC was forced to sharply increase its reserves beginning in 2007 as more homeowners began defaulting on their mortgages.

"As a result, the company posted large losses in each of the last three years, which reduced its capital to a precarious level. Almost all of the other mortgage insurers suffered similar fates, with several competitors being forced out of business.

"Even after the recent bump in long-term yields, they remain too low to meet most investors' needs," says Marvin Appel.

The editor of Systems & Forecasts explains, "The iShares NAREIT Mortgage Plus Capped Index ETF (REM) appears to be a good solution for those seeking income in 2011; its current SEC yield exceeds 10%.

"About 2/3 of its holdings are mortgage REITs, which are companies that borrow at short-term rates and use the proceeds to buy mortgage-backed securities.

This post is one in a series in which more than 60 newsletter advisors share their Top Stock Picks for 2011. This special report is courtesy of TheStockAdvisors.com.

"Founded in 1938, Owens Corning (OC) -- my top pick for 2011, is a leading manufacturer of building products, including insulation, roofing products, and composite materials," says George Putnam.

The editor of The Turnaround Letter explains, "The stock looks quite cheap, particularly for a company with such a strong business franchise in a temporarily depressed sector.

"With the new school year underway, we're adding an attractive REIT to our portfolio that specializes in campus housing: American Campus Communities (ACC)," says Stephen Leeb.

The growth & income specialist and editor of The Complete Investor explains, "The real estate investment trust, which went public in 2004, has been providing housing for college students since 1993, and is now one of the nation's largest developers, owners, and managers of high-quality student housing communities.

"The REIT has grown both through internal development and via acquisitions, most notably its 2008 purchase of the student housing division of GMH Communities Trust for around $1.4 billion.

"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.

"Capstead Mortgage (CMO) borrows for the short term at low cost -- rolling loans among a handful of big banks -- while lending money for the long term at a higher rate," says Andy Obermueller.

The editor of Government-Driven Investing -- which finds stocks positioned to benefit from changes in government policies and regulations -- explains, "Capstead, organized as a real-estate investment trust, keeps the spread for its troubles, and pays out 95% of its net earnings to shareholders. The result is a good defensive stock to help protect your portfolio.

"One of the things the government did to make sure that the housing market didn't crater even more than it had was to step in and guarantee certain mortgages. If the borrower defaulted, Uncle Sam would step in, like a co-signer, and make good on the loan.

In his Half-Priced Stocks, he explains, "Potlatch (PCH) owns plenty of them, with a portfolio of 1.6 million acres spread throughout Arkansas, Idaho, Minnesota and Wisconsin. That forestland produces a steady harvest year in and year out. Timber production has been rising at a healthy +9% annual pace, reaching 4.4 million tons before last year's slowdown

This post is part of a special report, Top Picks for 2010, the 27th annual survey in which TheStockAdvisors.com asks the nation's leading advisors for their single favorite stock for the new year. See all 80 stocks listed here.

"My pick for the top stock of 2010 is Gafisa (GFA), a Brazilian homebuilder and developer," says emerging markets specialist Paul Goodwin.

In his The Cabot China & Emerging Markets Report, he explains, "This is an experienced growth company in a country with an excellent economic engine."

This post is part of a special report, Top Picks for 2010, the 27th annual survey in which TheStockAdvisors.com asks the nation's leading advisors for their single favorite stock for the new year. See all 80 stocks listed here.

"Annaly Mortgage Management (NLY) is our favorite investment idea for 2010," says Jack Adamo.

In his Insiders Plus newsletter, he explains, "The company buys only Ginnie Mae, Fannie Mae and Freddie Mac bonds, all of which now have explicit U.S. government guarantees."

"Gafisa S.A. (NYSE: GFA) is a bet on Brazil; the company is the country's second-largest homebuilder," says international investing expert Nicholas Vardy.

In his The Global Bull Market Alert, he adds, "Brazilian homebuilders are a red-hot sector in a red-hot market. Brazil is one of the strongest-performing global markets this year, and one that you should definitely have exposure to in the final quarter of 2009.

"Brazilian homebuilders are a red-hot sector in a red-hot market. Stocks in this sector have already doubled their share prices this year as policy makers cut interest rates to a record low and the government unveiled a 34 billion real ($18.8 billion) housing stimulus plan.

"With its strong balance Plum Creek Timber (NYSE: PCL) will be able to weather the real estate storm," says growth and income expert Stephen Leeb in The Complete Investor. Here is his look at the timber play.

"Plum Creek, which was added to our model portfolio in November, is the largest and most geographically diverse private landowner in the U.S. and owns more than 7.4 million acres of timberlands in the Pacific Northwest, the South, and the Northeast.

"With occupancy rates around 95%, apartment REITs appear to be the one bright spot in the REIT sector," says Asif Suria in The SINLetter; he looks at AvalonBay Communities (NYSE: AVB).

"The company generates nearly half its net operating income from the NY/NJ metro area and New England. California represents an additional 32% of net operating income.

"With a management team that is well respected and leverage that is the lowest of any apartment REIT, AvalonBay has traded at a premium over the last few years and the stock was trading at nearly $150 when I first came across the company in early 2007.

"I continued watching the company over the last two years looking for an opportunity to start a position. With a decline of over 70% from its 2007 high and a yield of 8.1%, this apartment REIT is finally at a level that not only offers a fat yield but also the potential of price appreciation.

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.

"Seattle-based Plum Creek Timber (NYSE: PCL), the nation's largest private landowner with more than eight million acres, has caught our eye," says Bill Martin.

In his BullMarket.com advisory, he explains, "Earnings have been stunted in recent quarters by the housing slump, but the company sports a strong balance sheet and an asset base that thanks to nature only gets larger and more valuable as time goes by."

"Plum Creek, which operates as a real estate investment trust, reported surprisingly solid Q3 profit. It posted net income of $69 million, or 40 cents per share, for the quarter ended September 30th, compared with a profit of $59 million, or 34 cents per share, for the same period a year ago.

"In the 2007 quarter, fire losses in Montana forced the company to report a $4 million non-cash expense, or two cents per share, related to fire losses experienced in Montana.

"The company's EPS results topped the expectations of Wall Street analysts by a penny a share. Revenue grew to $414 million, up 2% from $407 million last year. The sales results were a bit short of the consensus of $419.8 million.

"The economic crisis began in the housing sector and will likely end there," says Stephen Leeb. In his top-notch The Complete Investor he takes a contrary look at two homebuilders.

"Though my view may sound contrarian to a fault, a close look at the housing market, especially given recent government actions, suggests a recovery will happen sooner rather than later and be stronger rather than weaker.

"When home prices decline, buyers pull back, afraid of buying too soon. This leads to further declines and further buyer reluctance. No surprise, then, that housing starts have fallen dramatically.

"Meanwhile, consumers, who had been borrowing money based on the value of their homes, found this source of credit drying up, which dealt a further blow to the economy.

"It is a vicious circle indeed. Ultimately, though, it will almost certainly end with more willing lenders and a stronger housing market as the huge amounts of money being flooded into the system start boosting balance sheets of potential lenders.