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RYL, LEN, PHM, MDC, MTH, DHI, Building - Residential/Commercial Stocks Undervalued

^{Published on 2011-04-20 06:10:21 - WOPRAI}
 

April 20, 2011/ M2 PRESSWIRE / BUYINS.NET / http://www.squeezetrigger.com is monitoring the Building - Residential/Commercial sector and these stocks are the most undervalued as of today. RYLAND GROUP INC/THE (NYSE:RYL), LENNAR CORP-A (NYSE:LEN), PULTEGROUP INC (NYSE:PHM), MDC HOLDINGS INC (NYSE:MDC), MERITAGE HOMES CORP (NYSE:MTH), DR HORTON INC (NYSE:DHI) are all expected to go Up as they are Undervalued according to industry standard valuation metrics. The valuation model employs a three-factor approach to stock valuation using fundamental variables--the company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's forecasted 12-month EPS, and the 30-year Treasury yield--to create a highly accurate reflection of a company's fair value.

The chart below displays the projected Fair Value and Valuation discount/premium of the most undervalued stocks in the highlighted industry group:

     Symbol     Company Name                        Last Close     Fair Value     Valuation                   Industry               
     RYL        RYLAND GROUP INC/THE                $17.50         $24.13         27.50% Undervalued          Building - Residential/Commercial
     LEN        LENNAR CORP-A                       $18.79         $24.92         24.60% Undervalued          Building - Residential/Commercial
     PHM        PULTEGROUP INC                      $8.24          $17.39         52.60% Undervalued          Building - Residential/Commercial
     MDC        MDC HOLDINGS INC                    $28.01         $36.89         24.10% Undervalued          Building - Residential/Commercial
     MTH        MERITAGE HOMES CORP                 $25.69         $26.83         4.20% Undervalued           Building - Residential/Commercial
     DHI        DR HORTON INC                       $11.81         $14.56         18.90% Undervalued          Building - Residential/Commercial

Here are some of the variables that are utilized when calculating the Fair Market Valuation of a stock: Long-run EPS growth rate, Duration of Business-growth-cycle, Volatility of EPS growth rate, Systematic or beta risk of the firm, Correlation between the firm's EPS and the interest rate environment, EPS growth volatility, Dividend payout ratio, Buffer earnings, Interest rate related criteria: Interest rate (30 year yield) long-run level, Duration of interest rate cycle, Interest rate volatility. The Fair Market Valuation uses 12-month historic and forecasted EPS values and the current 30-year treasury yield as primary determinants. When calculating risk/return values such as the Sharpe ratio, the historic periods used are five years.

Some expected results of the Valuation Model are: the valuation of a stock increases in a declining interest rate environment. Increasing current and/or projected EPS will produce a higher Valuation. While long-term EPS growth would produce a corresponding long-term Valuation increase, concomitant long-term interest rate increases would offset EPS growth and depress the Valuation. The shorter a company's own business cycle, the higher its stock Valuation will be.

RYLAND GROUP INC/THE (NYSE:RYL) - The Ryland Group, Inc., together with its subsidiaries, operates as a home building and mortgage-finance company in the United States. The companys operations cover various aspects of the home buying process, including design, construction, and sale. It offers single-family detached homes; and attached homes, such as town homes, condominiums, and mid-rise buildings, as well as sells land and lots. The Ryland Group also provides mortgage-related products and services, as well as title, escrow, and insurance services to its homeowners and subcontractors. It markets its homes to entry-level, and first and second-time move-up buyers. The company was founded in 1967 and is headquartered in Calabasas, California.

LENNAR CORP-A (NYSE:LEN) - Lennar Corporation, together with its subsidiaries, operates as a home builder and provider of financial services in the United States. The company's homebuilding operations include the construction and sale of single-family attached and detached homes, and multi-level residential buildings, as well as the purchase, development, and sale of residential land directly and through unconsolidated entities. Its financial services comprise providing mortgage financing, title insurance, and closing services for buyers of its homes and others. As of November 30, 2009, the company owned 82,703 homesites and had access through option contracts to an additional 21,173 homesites. It serves customers in Florida, Maryland, New Jersey, Virginia, Arizona, Colorado, Texas, California, Nevada, Illinois, Minnesota, New York, North Carolina, and South Carolina. Lennar Corporation was founded in 1954 and is based in Miami, Florida.

PULTEGROUP INC (NYSE:PHM) - Pultegroup, Inc., through its subsidiaries, engages in homebuilding and financial services businesses primarily in the United States. The companys homebuilding business includes the acquisition and development of land primarily for residential purposes within the continental United States; and the construction of housing on such land targeted for first-time, first and second move-up, and active adult home buyers. As of March 31, 2010, its homebuilding operations offered homes for sale in 842 communities. The companys financial services business consists of mortgage banking and title operations. It arranges financing through the origination of mortgage loans for its homebuyers; sells such loans and the related servicing rights; and provides title insurance policies as an agent, and examination and closing services to its home buyers. The company was formerly known as Pulte Homes, Inc. and changed its name to PulteGroup, Inc. in March 2010. Pultegroup was founded in 1956 and is headquartered in Bloomfield Hills, Michigan.

MDC HOLDINGS INC (NYSE:MDC) - M.D.C. Holdings, Inc., through its subsidiaries, provides homebuilding and financial services in the United States. It operates in two segments, Homebuilding, and Financial Services and Other. The Homebuilding segment constructs and sells single-family detached homes to first-time and first-time move-up homebuyers under the Richmond American Homes name. The Financial Services and Other segment originates mortgage loans primarily for homebuyers, as well as brokers mortgage loans for origination by outside lending institutions. This segment also offers third party insurance products and title agency services to its homebuyers, as well as provides general liability coverage for construction work performed associated with closed homes. The company was founded in 1972 and is based in Denver, Colorado.

MERITAGE HOMES CORP (NYSE:MTH) - Meritage Homes Corporation engages in designing and building single-family attached and detached homes in the southern and western United States. It offers various homes for a range of homebuyers, including first-time, move-up, luxury, and active adult buyers in 12 metropolitan areas of Arizona, California, Nevada, Texas, Colorado, and Florida. The company conducts its homebuilding and marketing activities under the Meritage Homes, Monterey Homes, and Legacy Homes brand names. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.

DR HORTON INC (NYSE:DHI) - D.R. Horton, Inc. operates as a homebuilding company in the United States. The company operates in two segments, Homebuilding and Financial Services. The Homebuilding segment engages in the acquisition and development of land, and construction and sale of residential homes on the land in 27 states and 75 markets in the United States. This segment also provides traditional single-family detached homes, as well as builds attached homes, such as town homes, duplexes, triplexes and condominiums, which share common walls and roofs. It constructs and sells homes primarily under the name of D.R. Horton, Americas Builder. The Financial Services segment involves in originating and selling mortgages, as well as provides title insurance agency and closing services. The company markets and sells its homes through commissioned employees and independent real estate brokers. The company was founded in 1978 and is based in Fort Worth, Texas.

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