Toll Brothers Inc (TOL), KB Financial Group, Inc. (ADR) (KB), Lennar Corporation (LEN): Best of Breed: Homebuilders

Last we will take a look at the smallest of our three homebuilders, KB Homes (NYSE:KBH). The company is also coming off a tremendous first quarter in 2013. KB Homes’s deliveries and new orders were up 29% and 54%. The company had an average selling price of $271,000, up $52,300 or 24% year-over-year. This is actually the highest first quarter selling price KB Homes has had since 2006 and has now had 11 consecutive quarters of improvement in selling price quarter-over-quarter. The number of homes in backlog increased to $700 million from $460 million, up 52%. Analysts expect KB Homes to grow revenue at 30% and 40% over each of the next two years and the company sports a PEG ratio above 24.

All three of these companies reported very optimistic first quarter results. The performance of these homebuilders provides strong support that the housing market is indeed rebounding. With increasing orders, backlog, and selling prices these companies stand to make a profit and report great results for many quarters to come. If you truly believe that housing in the US is back, it would smart to investigate these companies.

In my personal opinion, KB Homes presents a very interesting investing opportunity. The company has the greatest potential upside (which comes with the greatest risk of course). KB Homes was able to show significant year-over-year increases in all of our homebuilder metrics plus the company has a PEG ratio 12 times the industry average. If you are looking to speculate a little bit on the housing rise, KB Homes might be the company for you.

The article Best of Breed: Homebuilders originally appeared on is written by Daniel Paterson.

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