Builders Bounce Again

Meanwhile, D.R. Horton (DHI Quote) gained 6.6% to $14.34, Toll Brothers (TOL Quote) rose 6.1% to $21.91, and Lennar (LEN Quote) added 6.2% to $24.72.

On Monday, the group rallied after Citigroup analyst Stephen Kim upgraded several stocks in the sector, saying fundamentals are not likely to recover in the near term, but the stocks themselves have hit a bottom and should benefit from a trading rally in coming months.

"Timing the bottom in a volatile group like the homebuilders is never easy, and catalysts in these dark times will inevitably amount to a mere flicker," Kim wrote in his note.

"However, we are not to trying to suggest that trends in the homebuilding sector are about to get much better; rather the purpose of this piece is to point out that they have never been worse. And in this sector, with its long history of feverish booms and catastrophic busts, it is precisely when things have gotten this bad that the stocks start looking good," Kim said.

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