Housing Plays to Write Home About

 | May 14, 2013 | 4:00 PM EDT
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You would think they couldn't keep taking up the housing-related stocks. But you would be wrong.

Take the traditional homebuilders. Remember when Toll Brothers (TOL) hit $37 before it reported it's so called "bad" quarter and then dropped to $30 and change? Guess what? Back to $37.

People were apoplectic when I said that PulteGroup (PHM) could repeat as a big winner in the S&P 500 after leading the index last year. It had sold down to $17 and change after the Toll quarter, but now it is up to $24, which, while not going to the head of the class of the S&P given the robust year we are having, is up 33% since January.

Lennar (LEN) was another thought to have peaked when it reported and traded down, even though CEO Stuart Miller had nothing but good things to say on the call. That was when the group was laboring under the illusion that private-equity firms were going to flood the market with houses they had bought on the cheap. This manufactured worry was a lot like having the shadow inventory hanging over you from the likes of Bank of America (BAC). My, whatever happened to that shadow inventory? This market could certainly use some.

Now it turns out that those starved for homebuilders have a chance to sink their teeth into a fabulous one this week, William Lyon Homes, which is expected to trade under "WLH." (It has a stub on the OTC, but the real stock float will be priced after tomorrow's bell.)

I am thinking that this could be like Tri-Pointe or maybe even better because it is coming at a time when the homebuilders are almost all at their 52-week high and stocks like Sherwin-Williams (SHW) and PPG Industries (PPG), two big housing-related stories, are hitting all-time highs.

This group is so strong that it is not only lifting all boats but it is propelling them right through ranges that have served as lids on the group for much of the year.

I think that William Lyon is a terrific opportunity to sink your teeth into a new homebuilding name.

You have to put in for stock now, though. I am sure others will get wise to the fact that this company has fabulously cheap California land and could trade to a premium quickly in this red hot market.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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