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NOVEMBER 20, 2006
INSIDE WALL STREET
Hovnanian May Get Its House In Order Fast
Hovnanian Enterprises (_HOV_ (javascript: void showTicker('HOV')) ),
like other homebuilders, has suffered a big drop in orders. But it is
one stock that a few contrarians and daring bargain hunters are
betting on for a recovery sooner than the rest of the pack. Its stock
has crashed from 54 in January to 25 in August and has since edged up
to 28.35. The company posted a 34% drop in earnings for its latest
quarter, but it did not cut its estimates of $5 to $5.75 a share for
2006. The consensus for 2007 is $3.18. Has the shattered stock already
more than discounted the housing bust? "The upside potential
significantly exceeds the downside risk," says Bernie Schaeffer, CEO
of Schaeffer's Investment Research, which has bought shares. He sees
the stock at 50 in a year. Ivan Feinseth of Matrix USA adds:
"Hovnanian is priced like it's going out of business." Orders have
only slowed but haven't stopped, says Feinseth, who rates the stock a
"strong buy."
Note: Unless otherwise noted, neither the sources cited in Inside Wall
Street nor their firms hold positions in the stocks under
discussion. Similarly, they have no investment banking or other
financial relationships with them.
By Gene G. Marcial
INSIDE WALL STREET
Hovnanian May Get Its House In Order Fast
Hovnanian Enterprises (_HOV_ (javascript: void showTicker('HOV')) ),
like other homebuilders, has suffered a big drop in orders. But it is
one stock that a few contrarians and daring bargain hunters are
betting on for a recovery sooner than the rest of the pack. Its stock
has crashed from 54 in January to 25 in August and has since edged up
to 28.35. The company posted a 34% drop in earnings for its latest
quarter, but it did not cut its estimates of $5 to $5.75 a share for
2006. The consensus for 2007 is $3.18. Has the shattered stock already
more than discounted the housing bust? "The upside potential
significantly exceeds the downside risk," says Bernie Schaeffer, CEO
of Schaeffer's Investment Research, which has bought shares. He sees
the stock at 50 in a year. Ivan Feinseth of Matrix USA adds:
"Hovnanian is priced like it's going out of business." Orders have
only slowed but haven't stopped, says Feinseth, who rates the stock a
"strong buy."
Note: Unless otherwise noted, neither the sources cited in Inside Wall
Street nor their firms hold positions in the stocks under
discussion. Similarly, they have no investment banking or other
financial relationships with them.
By Gene G. Marcial