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Halftime Pt. 2 — Homebuilder: Housing Double Dip Fears Overblown

Despite a slew of negative housing data, Hovnanian Enterprises CEO Ara Hovnanian says fears of a double dip for homebuilders are overblown.

Given the home buyer tax credit, Hovnanian says a "ramp up" in home sales should have been expected for March and April. With the credit expiring June 30, the markets should have anticipated a "ramp down" in May and June.

"Both of those should have been discounted," says Hovnanian. "People are overacting."

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But with Hovnanian's $1.8 billion in debt and book value negative $3.47 per share, host Melissa Lee asked if the company will have liquidity should the downturn continue. Hovnanian says his company has been operating with considerable cash profits and has no concern about liquidity.

Hovnanian is optimistic about the housing market's future, citing a growing US population that will spur demand.

What's the Trade?

There is too much volitility in the homebuilders, says Patty Edwards of Storehouse Partners. She prefers Plum Creek Timber , which boasts a 5% dividend yield.

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CALL THE CLOSE

"I'll be a seller," says Jeff Tomasulo of SMB Capital. "I'm very cautious going forward in this market."

Mike Gurka of Neural Markets likes the commodities and is going to take a look at copper.

"We're hedged," says Patty Edwards of Storehouse Partners.

"Be a buyer on slow Fridays," says JJ Kinahan of TD Ameritrade.

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Trader disclosure: On June 25, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kinahan owns (C), (AMTD), (AXP); Kinahan owns (WFC) and short puts; Kinahan is short (SPY) options; Tomasulo owns (VZ); Tomasulo owns (RIG) options; Tomasulo owns Euro; Tomasulo owns Gold futures; Tomasulo owns (GS) puts; Tomasulo owns (CAT) puts; Tomasulo owns (AMZN) puts; Tomasulo owns (VXX)

Patty Edwards
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Chris Whalen
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Rich Repetto
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Sandler O'Neill Is A Market Maker In (CME), (NDAQ)
Sandler O'Neill Has Received Investment Banking Compensation From (NDAQ) IN Past 12 Months
A Principal Of Sandler O'Neill Serves As A Director Of (NDAQ)
(NDAQ) Was An Investment Banking Client Of Sandler O'Neill In Past 12 Months



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