A couple of weeks ago, I suited up in my best advice-giving paraphenalia and urged Foolish investors to wait a little longer before buying stock in homebuilders. But as I survey the landscape in which these builders ply their trade, that guidance is becoming progressively more difficult to sustain.
You'll recall that the October building numbers were a disaster. Housing starts fell 15% from September, to a seasonally adjusted rate of 1.49 million units. From October 2005, the decline was 27.4%. At the same time, permits dropped by 6.3% to a seasonally adjusted annual rate of 1.54 million, 28% below October 2005.
But the homebuilders' stocks apparently failed to notice those numbers. In fact, aside from an abbreviated hiccup when the October numbers were released, the share prices of most of the companies (whose primary purpose is to build houses) have done very nicely, thank you. And with a proper genuflection in the direction of buying low and selling high -- along with the notion that the builders have been tested of late by a steady stream of negative news -- we might look ever so briefly at three homebuilding names that could make sensible targets for nibbling by adventurous Fools.
Centex
Toll Brothers
And then there's Ryland
Before closing, let me note that homebuilding might not yet be out of the woods. But if you're in this game for more than a year at a time, the three names mentioned above might well make money for you.
More housing-related Foolishness:
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Fool contributor David Lee Smith owns shares of Centex, but no other company mentioned. He welcomes your questions or comments. The Fool's disclosure policy has a big back yard to play in.