Prudently Prune Homebuilders

In the long term, I believe the housing market will be healthy, but the boom has ended.

Shares in the homebuilders are close to the upper end of their trading ranges and are unlikely to break through to new highs soon. For investors who have ridden the stocks up, it's time for some prudent pruning.

Longer term, my model rates many of the homebuilders as strong buys. If you don't own them, you might want to buy the ones that are most undervalued on the list below. Demand from the baby boomers should increase as they relocate over the next 10 to 20 years to retirement areas, with Florida high on the list. ...