Housing Stock Recovery Could Be In Early Innings

The recovery in housing has been well telegraphed on Wall Street. In the past 12 months, the homebuilder index has rallied 140 percent, trouncing the returns of many other sectors of the S&P 500. Investors avoiding the sector because of the already high valuation could be missing an opportunity in some stocks, according to many analysts.

If history repeats, even partially, notes a weekend report in Barron's, the rebound in residential housing is in the early innings. Among the group, Lennar (NYSE: LEN), D.R. Horton (NYSE: DHI), and Beazer (NYSE: BZH) could be best positioned.
Other names receiving positive coverage include Toll Brothers (NYSE: TOL), KB Home (NYSE: KBH), and PulteGroup (NYSE: PHM). Due to high valuations, these stocks look attractive on pull backs. However, analysts are still cautious about Hovnanian Enterprises (NYSE: HOV).

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