Investopedia: Lennar Rebuilding, But Valuation Overbuilt

Homebuilders have already had a heck of a run over the last year, with names like Toll Brothers (NYSE:TOL), DR Horton (NYSE:DHI) and Lennar (NYSE:LEN) all up more than 125% over the last year and up many times over from the lows in the late fall of 2008. What concerns me is whether these moves have already discounted a lot of the early gains from the nascent housing recovery - setting up the possibility that housing activity (and prices) could continue to improve without necessarily taking the homebuilder stocks with them.

Please continue here:
http://www.investopedia.com/stock-analysis/2012/Lennar-Rebuilding-But-Valuation-Overbuilt-LEN-DHI-PHM-KBH0925.aspx

Investopedia: Toll Brothers Shows Not All Housing Is Terrible

The housing news cycle is still focused on the negative. The dominant stories from day to day still tend to revolve around the large volumes of bank-owned properties, the ongoing issues with the foreclosure process, and more and more stories of the malfeasance of banks, mortgage brokers, realtors and borrowers.

Wise investors know better than to just read the headlines without looking a little deeper. To that end, looking at the recent earnings report from Toll Brothers (NYSE:TOL) suggests that the higher-end housing market is doing OK and seems on track for recovery. That's not such good news for builders like Hovnanian (NYSE:HOV), Lennar (NYSE:LEN) or D.R. Horton (NYSE:DHI), but a recovery somewhere is better than bad news everywhere.

Underlying Second Quarter Results Seem a Little Better 

To be clear, it was not as though the Toll Brothers earnings report was uniformly fantastic. Revenue came in as expected with growth of 3%, but bottom-line earnings were worse than expected due in part to higher impairment charges. While the company did see solid improvement in gross margin (excluding impairments), SG&A was a little higher.

Please follow this link for the full piece:
http://stocks.investopedia.com/stock-analysis/2011/Toll-Brothers-Shows-Not-All-Housing-Is-Terrible-TOL-LEN-DHI-PHM-HD-LOW-MHK0601.aspx

Lumber Does Not Bode Well For Housing

I would like to mention that this column was written *before* the housing data came out the other day...

Over the last year or so, home building stocks as measured by the S&P Homebuilders SPDR (NYSE:XHB) have had a pretty respectable run, topping the S&P 500 by about 20% or so. Of course, it must also be mentioned that this is a strong recovery off of a deep bottom, as a four-year comparison shows a painful drop of over 60% for holders of this ETF.

Among this year-long rebound has been a muddle of mixed messages, as sentiment feels worse than the numbers look. Low interest rates and tax credits have encouraged some buyers to get back in the market, and banks seem to be reporting some stabilization. Going a step further, prices seem to be creeping up again, housing inventories have leveled off, and sales appear to be growing.

That has not really been good news of late, though, for the shareholders of stocks like Pulte (NYSE:PHM), D.R. Horton (NYSE:DHI), Lennar, or Toll Brothers (NYSE:TOL) as these stocks have all come off their highs lately. If these stocks can move unpredictably in the face of economic data, is there another data source for investors to watch?

The answer appears to be "yes".  

To read about the linkage between lumber futures and housing stocks, continue on to:
http://stocks.investopedia.com/stock-analysis/2010/Lumber-Does-Not-Bode-Well-For-Housing-XHB-PHM-DHI-TOL-CUT0618.aspx