This column was originally published on RealMoney on March 16 at 1:30 p.m. EST. It's being republished as a bonus for TheStreet.com readers.I recommend that investors maintain their foundation positions in the homebuilders while trading the ranges. After a strong 2005 and a robust January due to mild weather, housing starts cooled off in February, declining 7.9% to a 2.120 million annual rate. This was not as weak as expected. Home prices rose 13% nationally in 2005, according to the Office of Federal Housing Enterprise Oversight. However, the National Association of Home Builders said Wednesday that its confidence index had dropped 1 point from February to 55, the lowest reading since April 2003. The housing market and homebuilder stocks are facing a slowdown, primarily due to higher interest rates. Recently, several of the homebuilders I follow have issued cautious guidance. Toll Brothers ( TOL) reported a sharp rise in first-quarter net income, but it lowered guidance for 2006. Lennar ( LEN) and Ryland Group ( RYL) have also tempered their outlooks.
|3/15/2006 Close||ValuEngine Rating||(-UV)/ OV%||Fair Value||Value Levels||Pivots||Risky Levels|
|Beazer Homes||$66.14||S Buy||-7.50%||$71.50||$59.59 A/ $54.97 S||$62.68 S/ $66.24 Q||$70.88 Q|
|Centex||$64.00||S Buy||-16.40%||$76.58||$52.95 A||$61.24 A||$69.86 S|
|D.R. Horton||$33.30||S Buy||-17.70%||$40.48||$25.29 A||$30.83 A/ $35.26 S||$37.80 S|
|KB Homes||$65.12||S Buy||-16.90%||$78.38||$49.83 A||$59.59 A/ $66.51 S||$73.70 S|
|Lennar||$58.83||S Buy||-14.30%||$68.63||$43.51 A||$57.35 A||$65.92 S|
|Pulte Homes||$37.87||S Buy||-16.50%||$45.37||$28.60 A||$34.88 A/ $37.26 S||$43.04 S|
|Ryland Group||$67.41||S Buy||-17.50%||$81.68||$59.76 Q||$70.16 A||$78.64 A|
|Toll Brothers||$32.84||Buy||-9.40%||$36.31||$25.59 A||$29.99 A||$36.98 S|
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