Below the Radar: Fast, Cheap and In Control

Home-building stocks don't typically create a lot of buzz, but they certainly have delivered significant returns over the past year. This week's Below the Radar turns to Beazer Homes(BZH Quote), the eighth-largest publicly traded home builder with a foothold in the fast-growing South and Southwest, to examine its prospects.

Beazer soared 107.8% in 2000 and is up 50% year to date. These are strong returns, indeed, compared with the home-building industry's rise of 30.1% in 2000 and its decline of 8.3% so far this year. Trading at $60, the stock also has a relatively low price-to-earnings ratio of 8.5 and a solid, five-year earnings growth rate of 38%. By comparison, the home-building category is up 25% over the past five years.

This positive trajectory is expected to continue for Beazer. Its earnings per share are expected to rise 40% in the 2001 fiscal year ending in September, according to I/B/E/S, and management recently increased its EPS target for 2001 from $6.25-$6.50 to $7.00-$7.25. ...