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Housing ‘Looks Very Cheap Right Now’: Analyst

Tuesday, 9 Oct 2012 | 6:44 PM ET

Low inventories and high demand make the housing sector one with strong growth potential, Pimco’s Mark Kiesel said Tuesday on CNBC.

“Inventories six years ago were at all-time highs. The big change today is on the supply side,” he said on “Fast Money.” “You’ve got new-home inventories at 50-year lows, existing inventories at 7-year lows and the shadow inventory has fallen by a million and a half.”

Add to that pent-up demand from consumers and mortgage rates at 3.5 percent.

“The cap rates are basically 6 percent, so housing looks very cheap right now relative to most other assets,” he said.

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Kiesel, who is global head of Corporate Bond Portfolio Management, said that as the job market picks up and more homes are built, such plays as lumber and title insurance companies, which have direct exposure to housing, hold strong growth potential. One example was Weyerhauser.

Kiesel added that he also looked to pipeline, energy, chemical and gaming companies, which will grow along the housing sector.

“These are companies that will likely outgrow the overall growth rate,” he said. “Those are the companies you want to still own.”

Trader disclosure: On Oct. 9, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s “Fast Money” were owned by the “Fast Money” traders: Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long MSFT; Karen Finerman is long GOOG; Karen Finerman is short PAY; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Steve Grasso is long AET; Steve Grasso is long ASTM; Steve Grasso is long AUO; Steve Grasso is long BA; Steve Grasso is long F; Steve Grasso is long LF; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long P ; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long WYNN; Keith McCullough is long AAPL; Brian Kelly is long UNG; Brian Kelly is long DBA; Brian Kelly is long RIA; Brian Kelly is long NAT GAS FUTURES.

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