IS IT TIME TO LOOK AT HOME BUILDERS ?
The real estate in the United States will rebound soon. No one can predict the precise moment it will occur. However, indications are that the worst is behind us.
During the last few years, housing inventory has been depleted. Interest rates are historically low. With the prospect that interest rates will rise soon, buyers who sat on the fence, will make their move and purchase a home.
Organically, the population in the USA is growing. New immigrants are likely to purchase a house at once, as they did in the old country.
On the other hand, foreclosures and short sales are historically high. Those people who lose their houses will move lower cost accommodations. Buyers of those properties are real home owners and investors who are looking for a long term investments.
The two companies I believe will do very well in the near future are;
Hovnanian Enterprises. Inc (HOV) and Beazer Homes USA, Inc (BZH)
Hovnanian (HOV:$4.49,00$0.17,003.94%) earlier this month reported net income of $236.20 million for the fiscal first quarter - its first profit since 2006. Hovnanian received a $291.3 million tax benefit.
Beazer Homes was recently up 22c to $4.94 on renewed takeover chatter. The BZH April option implied volatility is at 67, May puts are at 64 - below its 26-week moving average of 88. Additionally, call option volume of 5,767 contracts compares to put volume of 50,976 contracts according to Track Data, suggesting traders taking positions for price movement.
Buy ‘HOV’ at around $4 a share. The target price by the end of the year is $10 a share.
Buy ‘BZH’ at below $5 a share with target price at $12 a share by the end of the year.