• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

You Can Still Play Housing's Resurgence

It's a crowded bandwagon, but these five housing-related stocks are priced to move.
By JOHN DORFMAN Mar 18, 2013 | 11:00 AM EDT
Stocks quotes in this article: MTH, NVR, SCSS, FLXS, CSL

It's not too late to invest in the rebirth of the housing industry, but it's tricky.

Growth investors, who are willing to pay up in hope of ballooning profits, have lots of choices among both homebuilders and household goods stocks. For value investors like me, who attempt to buy undervalued stocks, it's tougher. People have caught on to the idea that the long-moribund housing market is surging again, and the stocks are priced accordingly.

New-home sales peaked at a seasonally adjusted annual rate of almost 1.4 million homes in July 2005. In the housing bust, sales dropped to a rate of 273,000 homes in February 2011. The January 2013 pace was 437,000, and many economists believe the February number will come in much higher. Sales of existing homes show a similar pattern, though the numbers are considerably larger.

These numbers are out there for all to see. So the housing stocks are a crowded bandwagon right now. Yet I believe it's not too late, because I believe we are in the early innings of a housing renaissance. Also, some indirect plays are available. Here are five housing-related stocks of interest.

Perhaps the least expensive homebuilder now is Meritage Homes (MTH). Based in Scottsdale, Ariz., Meritage builds mainly in the South and West. It lost money in four of the past six years, including huge losses in 2007 and 2008. But it is profitable now, and analysts expect it to remain so. The stock goes for about 15x earnings.

Another homebuilder that I own personally and for almost all of my clients is NVR (NVR), based in Reston, Va. I chose it because it has a decent balance sheet, whereas the balance sheets of many other homebuilders have been shredded by five years of bad times. NVR's debt is only 40% of stockholders' equity.

An indirect housing play is Select Comfort (SCSS) of Plymouth, Minn., which makes mattresses that are adjustable for firmness. It is a play on an increase in household formation, and it is debt-free. 

Another indirect play, which I own personally and for clients, is Flexsteel Industries (FLXS). Based in Dubuque, Iowa, it makes furniture for homes and offices. The name comes from the company's use, about 90 years ago, of steel springs inside its furniture. The stock sells for about 12 x earnings.

I also like Carlisle Companies (CSL) of Charlotte, N.C.. It is a conglomerate, but one of its main products is roofing. The shares go for 16x earnings.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Dorfman and his clients had positions in CSL, FLXS and NVR.

TAGS: Investing | U.S. Equity

More from Investing

Liquidity Dries Up and Small-Caps Are Slammed

James "Rev Shark" DePorre
Apr 12, 2021 10:55 AM EDT

There is some very ugly action under the surface.

Adaptable Uber Has Managed to Stay in the Game - Here's an Earnings Trade Idea

Stephen Guilfoyle
Apr 12, 2021 10:44 AM EDT

Uber has now said that demand for the ride hailing service is recovering faster than driver availability.

Where Are the Sell Signals?

Guy Ortmann
Apr 12, 2021 10:20 AM EDT

Four new closing highs achieved as technical sell signals are absent.

Chipotle Mexican Grill Notches Yet Another New High

Bruce Kamich
Apr 12, 2021 10:08 AM EDT

The charts are bullish and the bearish divergences have not resulted in a correction.

There Are Ample Reasons for My Abundance of Caution Around the Markets

Bret Jensen
Apr 12, 2021 10:00 AM EDT

I think inflation is going to be a major theme to the economy and markets in the coming months and years.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 04:44 PM EDT PAUL PRICE

    Pretty Incredible + Hard to Believe

  • 11:18 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The 5 Pillars of Exceptional Trading
  • 08:05 AM EDT BOB LANG

    Bitcoin vs. Gold: Which Should You Invest In Now?

    Read my article TheStreet here!
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login