Ken Heebner’s Top Stock Picks Include Citigroup Inc. (C): Morgan Stanley (MS), Lennar Corporation (LEN)

Whirlpool Corporation (NYSE:WHR) is up 46% in the last year- possibly on similar bullishness regarding housing- and Heebner and his team were buying the appliance manufacturer as well in the fourth quarter. However, results were actually poor in that quarter as revenue fell and margins contracted. Wall Street analysts believe that Whirlpool will recover, and its market capitalization of $8.7 billion places it at 10 times forward earnings estimates. Given the decline in business we think that we would avoid the stock for now.

The fund increased its holdings of PulteGroup, Inc. (NYSE:PHM), another homebuilder, by 24% to 8.9 million shares. The stock carries a beta of 2.2, demonstrating how sensitive it is to the broader economy. The forward earnings multiple here is 14, which would make PulteGroup a decent value if it was able to hit its earnings targets while maintaining its growth prospects. Of course we wouldn’t put too much faith in analyst projections and certainly we would want to examine PulteGroup’s peers- including Lennar- in more detail before recommending one or another.

Disclosure: I own no shares of any stocks mentioned in this article.