The promise of a stimulus package from the incoming Obama administration has raised hopes that the battered housing sector will soon be stabilized. That's encouraged investors to buy home builder stocks — but Ivy Zelman of Zelman and Associates warns that while some companies are promising, others are not.
"The homebuilders and building-product companies are trading on a hope rally right now," she told CNBC, but she played down ideas about quick stability in housing. "Unfortunately, we do not see that, and we would be selling into strength, into the rally, and selectively."
"We like NVR," she said. "We think it's the only company in this space that is an investment...as opposed to the other stocks that are more trading-oriented, and we do like a few names, like Lennar and Centex."
Her list of homebuilding stocks to "be taken off the table" is a longer one: Pulte, KB Home, Toll Brothers, DR Horton, and Ryland.