If you're aiming to "buy low and sell high," then it makes infinite sense to start your search with bargain-priced stocks. Regularly reviewing a list of stocks trading near their 52-week lows can be a great first step.
Here, I'll try to do the initial legwork for you. To prevent us from being inundated with scores of disparate companies, I'll conduct my search by industry. This will allow us to make some initial comparisons among semirelated companies.
There are 24 industry groups as defined by the Global Industry Classification Standard (GICS). Consumer Durables and Apparel is one of them, and homebuilding is part of it.
Below are the top three companies in homebuilding (by market cap) that are hugging 52-week lows.
|
Company |
Recent Price |
52-week Low |
52-week High |
P/E Ratio (Trailing) |
|---|---|---|---|---|
|
NVR |
$691.00 |
$606.20 |
$769.50 |
20.9 |
|
MDC Holdings |
$28.91 |
$24.50 |
$39.28 |
14.8 |
|
Ryland Group |
$17.10 |
$14.16 |
$26.03 |
NM |
Source: Capital IQ, a division of Standard & Poor's. NM = not meaningful.
It's not shocking to find three homebuilders trading near 52-week lows. Perhaps it does surprise you to notice that two of the three are actually profitable.
In fact, NVR has managed to stay profitable throughout the housing downturn. MDC wasn't quite as lucky, but both NVR and MDC's earnings are mere fractions of what they were during the bubble -- yet they trade for reasonable, if not quite dirt-cheap, earnings multiples.
Before you get too excited, remember that it's always dangerous to use bubble earnings as a benchmark. That said, both NVR and MDC have rock-solid balance sheets -- both cover their debt with cash and short-term investments.
I'll be looking into these further. If you are interested in reading more about these stocks, add them to My Watchlist to find all of our Foolish analysis on them.
