Thanksgiving signals the time for High School homecoming dances and I think it may also signal the time to get back together with the homebuilder sector.
Interest rates might not go up forever and the bad news seems to be more than priced into this group, which has the lowest p/e of any I follow.
Just like my Valero rule for buying oil stocks, I have a Toll Brothers/Lennar rule for homebuilders: If they are heading up, then it is safe to buy in.
Just a few I like:
MTH – p/e 8.7, 33% off high at year’s low.
LEN – p/e 8.1, 25% off high at year’s low.
SPF – p/e 6.2, 25% off high 15% above low.
DHI – p/e 8.8, recommended last week, I like it to $38
KBH – p/e 8.14, earnings on 12/15 – no warnings so far!!!
RYL – p/e 9, 15% off high, 25% above low – deservedly so.
They all have plenty of room to run if the industry comes back in favor. I think all the rats have left this ship and it’s light enough to float at this point.
