This Housing Recovery Is Real

NEW YORK ( TheStreet) -- The stock of Miami-based Lennar ( LEN) is up 168.3% over the last 12 months. The stock of Ft. Worth, Texas-based DR Horton ( DHI) is up 133% over the last year. How about Atlanta, Ga.-based Home Depot ( HD)? Its stock is up 87.1% over the last 12 months. By comparison, the S&P 500 is up 26% during the same period of time.

This is my current ranking of the various sectors of the market that I track on a daily basis; the good and the bad:

Data from Best Stocks Now app

Biotech, with its A-, is followed by housing, with a B+. As of now, I remain heavily invested in the biotech sector. It has been at the top of the rankings almost since the beginning of the year. I took a 62% profit in Pharmacyclics ( PCYC) and a 64% profit in Alexion Pharmaceuticals ( ALXN) earlier this year. I am back in both of those stocks right now, along with several other biotech-related stocks.

I own them in the aggressive growth accounts I manage. As of Friday, this portfolio of 25 stocks was up just over 20% year to date. To see the whole portfolio, you can get four free copies of my weekly newsletter by clicking here.

As mentioned above, the U.S. home construction sector is ranked No. 2. I use the exchange-traded fund iShares Dow Jones U.S. Home Construction ETF ( ITB) as a proxy for this sector. Let's take a quick look at its performance over the years:

Data from Best Stocks Now app

As you can see, the five-year performance of the overall housing sector has just about matched the return of the S&P 500. Over the last three years, however, the sector has delivered about eight points of alpha per year over the market. This sector has really roared over the last 12 months, with a return of 119.7%.

You can also see from the one-year chart of ITB below, just how strong this sector has been:

Is this rebound in the housing market for real?

I was asking myself this same question several weeks ago, when decided to invite Mick Pattinson back on my daily radio show, Best Stock Now.

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