PulteGroup, Inc. (PHM), D.R. Horton, Inc. (DHI): Housing Stocks – Buy the Dip

NVR, Inc. (NYSE:NVR) only generated one quarter of losses during the housing collapse. Compare that to PulteGroup, Inc. (NYSE:PHM), which saw GAAP EPS in the red for 19 out of 20 quarters. The company runs an efficient operation with local distribution centers. It has also historically only purchased land AFTER a completed sales contract. This results in industry leading operating ratios and a stock price that is one of the best in the industry when viewed from a long-term lens. The company’s current price-to-book is just over 3 times, the same as PulteGroup, but with a much better ROE. If you like stock buybacks, then NVR may be the best way to play the housing recovery.

The Foolish bottom line

Housing stocks are on sale. The unprecedented percentage change in mortgage rates created near-term weakness, but the secular story still remains in the early innings. PulteGroup, Inc. (NYSE:PHM) is focusing on profitable growth and has substantial earnings growth potential in coming years. NVR, Inc. (NYSE:NVR) continues to put out solid quarterly results and might be the best stock to own in the group.

Justin Carley has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Housing Stocks – Buy the Dip originally appeared on Fool.com.

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