I think the homebuilders are interesting, says Karen Finerman. But I only like those with strong balance sheets. I’d recommend long Pulte (PHM) and Centex. If you think there’s going to be a V-shaped recovery Karen’s trade works, explains Deutsche analyst Nishu Sood. Pulte and Centex hold a lot of land and they can bring it online quickly and capture market share if the economy takes a sharp turn for the better.

housing

First, I never liked the homebuilders. What's happening out there, the massive sales of existing and foreclosed homes, will keep a lid on prices, and you need rising prices and dramatically lower inventory to make a compelling case for KB Home (KBH) or Pulte (PHM) or D.R. Horton (DHI) or especially Hovnanian (HOV).

Aug. 11 blog post: "First, I never liked the homebuilders. What's happening out there, the massive sales of existing and foreclosed homes, will keep a lid on prices, and you need rising prices and dramatically lower inventory to make a compelling case for KB Home (KBH) or Pulte (PHM) or D.R. Horton (DHI) or especially Hovnanian (HOV)."

"There is a gigantic tug of war playing out here between the homes being pumped out by Lennar (LEN) or Pulte (PHM) or Horton (DHI) and the homes owned by Bank of America (BAC) or Wells Fargo (WFC) or JPMorgan (JPM) -- repossessed homes that could really kill any recovery. The homebuilders cannot make the houses cheaply enough to compete against the foreclosed homes. That's terrific." "We Want Sales of New Homes to Dry Up," 6-24-09

McHugh also is making some bets on early beneficiaries of a cyclical recovery. "We're primarily bottom up, but we do take a macro viewpoint in each of our individual sectors," he explains. Some of McHugh's recent buys include home builders D.R. Horton (DHI) and Pulte Homes (PHM). The fund got rid of home builders in August 2006, McHugh says, but started accumulating shares again in the fourth quarter of 2008 and the first quarter of this year. "We're positioning the portfolio with some of those stocks that we feel can benefit from a recovery in the economic cycle," he says. "That's where we would put [Horton] and Pulte."

Took advantage of crisis to buy out competitors. Now largest homebuilder in world

long-term gains

Pulte Points to Positives: Jason Weisberg of Seaport Securities tells TSC's Debra Borchardt that the Pulte deal is another positive step toward putting in a bottom in this market. Click here to watch the video.

As for Pulte Homes(PHM) and DR Horton(DHI), "I think you buy 'em," he said.

no confidence at all in the properties sector

will be in the quicksand for quite some time. The downturn in new home sales has only just begun

Housing is a disaster.

Price targets in the group are too high and the group is vulnerable to another leg down.

Short em. Forward P/E higher than its ever been. Ghost town of the west are Vegas, Phoenix, and the Most at risk state going forward, California. Lets see if the difference between existing homes sales and new continue. Oh yeah, they broke ground and can't stop. Monthly inventory gaps up. Whoops. Uhg here come the speculator homes for sale. Double whoops. Uhg here come the bankrupt ones for sale. Triple Uhg. Oh no tighter standards for mortgages, less potential pool of buyers. YUCK !

Estimates are not even in the ball park.