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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (8234)	9/16/1999 4:23:00 PM
From: Q.	Read Replies (1) of 78805

re. homebuilders, I calculated an average p/e of 7.1 for the 7 stocks recommended by Merrill Lynch. That's based on trailing 12 months, at today's price. The Sept. 9 ML research report on the sector says these 7 stocks will have eps growth of 32% in CY99 and 12% in CY00. The valuation looks very good to me, with a p/e of 7 and double-digit growth rates. It seems that Mr. Market is pricing the sector assuming a scenario that is a lot uglier than ML's. the ML seven are: LEN KBH DHI MDC TOL CTX PHM finance.yahoo.com Earlier this week I added KBH and DHI to my existing position in LEN. One attraction to LEN and KBH is that they have a high exposure to California. I agree with Michael that CROS has superb management and business model. The disadvantage I see is that I just don't want to pay a premium in p/e and p/b for a smaller cap company where the differences in ROE compared to the bigger players are not that great.

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