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After 4 Years Has Housing Bottomed?

For the first time in 4 years, a widely followed analyst upgraded a handful of homebuilders. Why now?

We’re talking about the attention-getting call made by Deutsche analyst Nishu Sood who spoke with us on the the Halftime Report after suggesting in a client note that this may be a good time to establish new positions in the sector – albeit selectively.

“Housing has been falling for 5 years, and we believe it’s ready to recover,” he says.

He explains that's predicated on his belief that foreclosures and excess inventory have stabilized. “They’re not getting better but they’re not getting worse.”

But at the heart of his thesis is the fact that he believes home price declines have leveled off on the lower end.

As a result three stocks in this space that he likes are D.R. Horton, Meritage Homes and Ryland Homes – which Sood upgraded to Buy from Hold.

These firms all sell to the first time homebuyer. ”The housing pyramid has to be built from the bottom up. That starts with the first time buyer,” he says.




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Trader disclosure: On Aug 9, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Finerman owns (AAPL); Finerman's firm owns (ARM); Finerman & Finerman's firm owns (BAC); Finerman’s firm owns (BBY); Finerman's firm owns (LEA); Finerman’s firm owns (KFT); Finerman & Finerman's firm owns (JPM); Finerman & Finerman's firm owns (RIMM); Finerman’s firm owns (TSX); Finerman’s firm owns (GYMB); Finerman’s firm owns (PLCE); Finerman's firm owns (WMT); Finerman's firm owns (DAN); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts; Pete Najarian owns (HPQ) call spread; Pete Najarian owns (RIMM) call spread; Pete Najarian owns (GS) calls; Pete Najarian owns (V) call spread; Cortes owns (CIB); Cortes owns (FCX); Cortes owns (OAS); Cortes owns (QQQQ); Cortes is short US Treasuries; Cortes is short the Japanese Yen; Stutland is long (TLT) and short calls; Stutland owns US treasuries

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Robert W. Baird & Co. and/or its affiliates expect to receive or intend to seek investment banking related compensation from (RIMM), (MOT), (NOK), (GOOG), (AAPL) within the next 3 months.

For David Bank
RBC Capital Markets is currently providing The Walt Disney Company with non-securities services

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SummerHaven Index Management is the creator and licensor of the SDCI to the U.S. Commodity Index Fund, and SummerHaven Investment Management is the trading advisor to USCI

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