Barron's Thinks Pulte (PHM) Could Be A Winner In The Housing Market

June 17, 2009 8:36 AM EDT

Last night, Barron's published a positive article on Pulte (NYSE: PHM) because it feels bullish housing starts data add support to Pulte's already sturdy foundation.

The U.S. Department of Commerce yesterday released data on new home construction that Barron's feels offered compelling data that the slump in construction has indeed reached bottom. And, that news should lend support to the idea that shares of Pulte Homes are worth owning.

JPMorgan Chase analyst Abiel Reinhart, said new single-family homes constructed in May are below the rate of new home sales in April by about 30%. "This means inventories will continue to decline even if sales pull back," says Reinhart.

And a draw down of industry inventory will help Pulte shore up the value of its inventory and decrease the write-downs.

In the meantime, Pulte has managed to bring in the expenses and sell some properties, adding $674 million in cash over the last 4 quarters despite suffering net losses of over $1.3 billion.

Barron's says if Pulte can keep cash coming in during the worst housing market in years, PHM should certainly do well as the housing market improves.

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