Builder Stocks As Fortune Tellers

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Is now the time to Buy Builder's Stock? (Buy a home?) (Get on with life?)

Pulte Homes Inc is the Builder for Sun City Hilton Head. I've been watching this stock for several weeks now. People are buying it and other Builder stocks as well. 

 I'll give you a list at the end of this post of the top ten.

 Pulte Stock Performance

Growth Rate -9.00   Sales (Yearly Sales - $Millions) $8,445.00
Earnings Per Share) $-1.75   Mkt Cap (Market Capitalization - $Millions) $3,735.00

Below is a 5 year chart on a month to month basis. This stock is establishing a base and is trading in a $10-15 dollar range.

I think this stock along with other builders is being quietly purchased. Perhaps the Builders are buying back their own stock--I haven't checked that out, but it's a real possibility. They are buying "low." And someday they will sell there stocks "high."

(Stock Chart is from BIG

There is a right time to buy.  However, it is very tough for most of us to "pick a bottom" But this stock chart is an indication to me that there is some nibbling and some forward-looking confidence. The same holds true for the housing market.  Because of fear of overpaying, people want to pick a bottom. The risk is that they miss opportunity.

There is also the fear of the unkown that holds people back--will the economy fold? Will gas prices continue to climb?This is the wall of worry--fear keeps people stuck. Most of what is feared never comes to pass and it is an unhealthy way to live.

As my late mother-in-law used to say: "Columbus took a chance."  Calculated risk-taking is prudent risk. And you can win. Sit on the sidelines for too long and you lose. Control what you can control and leave the rest to the Almighty--but MOVE. FORWARD.

Here are ten stock picks. Put them in a watchlist and WATCH...I am not giving any investing advice--so, you're on your own. The Stock Symbol is in Parenthese.

Pulte (PHM), Meritage (MTH), NVR Inc (NVR) Beazer Homes (BZH), Toll Brothers (TOLL),  KB Homes (KBH), Hovnanian (HOV) Orleans Home builders (OHB) DR Horton (DHR) Centex(CTX)

All of these builders, with the exception of Beazer, Meritage and NVR, build in my neck of the woods, Bluffton S.C.

If you purchased these stocks on January 2, 2008 and held them to date, your portfolio would have gained 14%. (and I don't believe in" buy and hold"--but that's another subject)

What is also indicated here for these stocks is that they have momentum. Just for fun, I'll put these in a model portfolio and paper trade the portfolio with $50000. Let's see how these stocks do over the coming weeks. The stock market is a forward looking indicator. Let's see what it tells us.

Posted by

John March


Comments (2)

David Spencer
Keller Williams Northland - Kansas City, MO
Show Me real estate in Kansas City

Home builders have been buying their stoc for the past 18 months. Hasn't helped yet, but dilution is not a big issue at this time.

Sep 01, 2008 10:36 AM
Frank Rubi
Frank Rubi Real Estate, LLC - Metairie, LA

Scott, thanks for sharing your information and your chart on this stock. I don't hold many stocks my self.

Sep 01, 2008 01:40 PM