Editor's note: As part of our partnership with PBS's Nightly Business Report, TheStreet's David Peltier joined NBR Tuesday (watch video and read transcript here) to look at beaten-down homebuilder stocks under $5.

NEW YORK (

TheStreet

) -- The March S&P/Case-Shiller home price numbers

were released earlier today

, with the overall reading for 20 of the largest cities in the U.S. falling 3.6% from the previous year and coming in at the lowest level in eight years. Even with mortgage rates as low as they've been all year, the combination of a stagnant employment market and a steady stream of foreclosures was blamed for the poor result.

This bearish data is reflected in the year-to-date performance of the

ISE Homebuilders Index

. At current levels, the index is down 5% for 2011, lagging the broader stock market indices. Of the 17 homebuilders in the index,

Beazer Homes

(BZH) - Get Beazer Homes USA, Inc. Report

is the second worst U.S.-based performer.

At $4.13 a share, the stock is down about 23% year-to-date. That said, Beazer shares have rebounded in four straight sessions, including an 8% gain on Friday. One fact that suggests the worst could already be behind the stock is that three insiders -- including CEO Ian McCarthy -- have bought shares of the company on the open market in the past week.

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It's hard to argue that anyone understands a company's prospects better than the company's senior management, so it's generally a positive sign when they invest their own money into the stock. Potential bargain-hunters would also point out that Beazer has a book value of $4 a share, which should help limit downside potential in the shares.

In the meantime, management is cutting costs and the company could see better orders in the second half of the year -- facing easier year-ago comparisons. With that in mind, I believe that active traders can follow the insiders and purchase Beazer at current levels for potential 20% return this summer.

At $2.66,

Hovnanian Enterprises

(HOV) - Get Hovnanian Enterprises, Inc. Class A Report

shares are down about 35% year-to-date, making the company the worst performer in the ISE Homebuilders Index. Similar to Beazer, Hovnanian is currently losing money and not expected to return to profitability in 2012. But unlike Beazer, Hovnanian has a negative book value.

Hovnanian is scheduled to report its fiscal second-quarter results on June 7. And while shares of Beazer Homes appear to have bottomed out for the time being, I'd rather wait and see Hovnanian's latest set of numbers before attempting to make a similar diagnosis for the stock.

--Written by David Peltier in New York.

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David Peltier is a research associate at TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier appreciates your feedback;

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