Housing Sector Snapshot (Part 2)

25 Stocks That Have No Floor Under Them

If you were able to read yesterday’s blog post, you now know that there are plenty of housing plays that are ripe for the picking. And it looks like some investors have caught on. In the past week, while the S&P 500 has climbed 1.7%…

  • Building materials stocks have risen an average of 3.6%.
  • Home builder stocks have gained 4.8%.
  • Home improvement stores stocks have gapped up 11.9%.

But does this mean you should run, not walk, to pick up any and all housing-related stocks? Not necessarily. Before you buy any stock, you should run it through my Portfolio Grader tool to screen it for fundamental health and profit potential.

Or else you could end up buying something like Sears’ home and garden spinoff Orchard Supply Hardware Corp. (OSH). This stock has lost half its value in the past month after word got out that the company has hired lawyers to help it restructure. Orchard Supply Hardware has been besieged with debt problems, but if current shareholders had thought to check Portfolio Grader, they could have known to get out months ago. Ever since I added OSH to my database last February, this Moderately Aggressive stock has stayed firmly in sell territory due to anemic sales growth, abysmal cash flow and lackluster sales growth. And that’s just to start.

The fact is that despite the broad housing recovery, there are still some companies that you should steer clear of. As we progress through first-quarter earnings season, it is essential that you use Portfolio Grader to separate the real buying opportunities from the red herrings. I covered the stocks you should take a closer look at yesterday, so today let’s run down my 25 lowest-ranked home builders, construction materials companies, mortgage REITs and home improvement stores. If you own any of the stocks below, you may want to consider finding a good time to exit your position.

Symbol Company Name Quantitative Grade Fundamental Grade Total Grade
ANH Anworth Mortgage Asset Corp. D C D
ARE Alexandria Real Estate Equities Inc. F C D
AVB AvalonBay Communities Inc. F C D
AWI Armstrong World Industries Inc. D C D
BRE BRE Properties Inc. D C D
BXP Boston Properties Inc. D C D
BZH Beazer Homes USA Inc. D D D
CLI Mack-Cali Realty Corp. D D D
CLP Colonial Properties Trust D D D
CMO Capstead Mortgage Corp. D C D
EJ E-House (China) Holdings Ltd. F C D
EQR Equity Residential D C D
ESS Essex Property Trust Inc. D B D
GFF Griffon Corp. D C D
HTS Hatteras Financial Corp. D C D
NX Quanex Building Products Corp. F D D
OSH Orchard Supply Hardware Corp. Cl A F D F
SLG SL Green Realty Corp. D C D
SSD Simpson Manufacturing Co. F C D
TRC Tejon Ranch Co. F D D
UFPI Universal Forest Products Inc. D C D
VMC Vulcan Materials Co. D C D
WRE Washington Real Estate Investment Trust D C c


Louis Navellier

Louis Navellier

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