These days, any mention of the housing market in conversation usually elicits a prolonged groan (especially if you live in California or Nevada). Homebuilders nationwide are feeling the pinch of a tight credit market, falling land prices, and mounting inventories. However, while the outlook for real estate is pretty dismal, times like these always make me ask myself: What would Buffett do? The answer? He would start looking for well managed, undervalued companies that he could pay bottom dollar for. While I don’t think now is the time to buy by any means, tenured and cash rich companies like MDC Holdings (NYSE: MDC) may have a place on my watch list moving forward.
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Tags: homebuilders, housing market, mid cap stocks
With the US economy looking more and more like it is headed for a recession, investors will likely take positions in more defensive sectors such as consumer staples, health care, and utilities. In my opinion, this makes stocks like Mirant Corp. (NYSE: MIR) look attractive at current valuations.