This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Homebuilder Stocks Fidelity Is Betting On

New-home sales data added in this update

BOSTON ( TheStreet) -- The U.S. homebuilding industry is still trying to crawl out of the biggest slump in a generation, with most analysts' forecasts calling for anemic growth beginning later this year.

Key data on the housing sector show that growth may be even further away still. The Commerce Department said new-home sales plunged 16.9% in February to a seasonally adjusted annual rate of 250,000, the worst rate since 1962.

But a few investors are placing big bets on the industry now, including Fidelity, the second-largest mutual fund company. It holds stakes in each of the industry's five biggest companies that range from 13% to almost 16% of their outstanding shares, two to three times the size of the next largest shareholder.

A slowly recovering economy after a recession and a decade of overbuilding contributed to the worst housing-market conditions in more than two decades. The industry has been hamstrung by high unemployment, low consumer confidence, tough new lending standards and banks' reluctance to lend.

>>New-Home Sales Plunged 16.9% in February

Ratings firm Standard & Poor's says that despite "challenging" market conditions, "we believe there are some signs that homebuilders could realize positive, albeit slow, growth in the second half of 2011."

Katrina Dudley, a housing industry analyst and portfolio manager at Franklin Templeton's family of Mutual Series funds, said in an interview yesterday the number of new homes being built is likely at a cyclical low and, given the nation's continued population growth, it won't remain there for long.

But when the tide will change is still an unknown, she said. A predictor of that will be steady job creation.

Daniel Kelley, who runs the Fidelity Select Construction and Housing Portfolio (FSHOX), said in an interview yesterday that stable prices will lead to a turnaround. Just last week, the National Association of Home Builders/Wells Fargo Housing Market Index edged up to the highest reading since May 2010. The latest data indicate that "more builders view sales conditions as good, than poor -- which hasn't been the case since April 2006," said the NAHB.
1 of 7

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DHI $27.39 0.00%
KBH $16.76 0.00%
LEN $50.83 0.00%
PHM $20.08 0.00%
TOL $37.67 0.00%

Markets

DOW 17,596.35 -350.33 -1.95%
S&P 500 2,057.64 -43.85 -2.09%
NASDAQ 4,958.4680 -122.0370 -2.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs