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April 15, 2010
As the latest earnings report indicated, Hovnanian hasn't fully recovered from the
bursting of the housing bubble, but it is doing better than its industry group as a whole.
Recent changes to the tax code--which were part of the stimulus bill--modified write off rules
and allowed huge builders like Hovnanian to apply losses from 2008-2009 against taxes paid
for the previous five years--the old law only allowed write offs against the prior two years.
This has provided the company some much-needed breathing space--in the form of an
estimated $290 million rebate.. Yesterday, the stock jumped hard and provided a one day
gain of more than 10%.
However, it remains to be seen how the latest foreclosure news will effect the Home
Builders. HOV looks good to our models, but they cannot account for investor sentiment as
the market digests the news that the housing market is not out of the woods just yet.
MARKET OVERVIEW
Summary of VE Stock Universe
Stocks Undervalued 39.03%
Stocks Overvalued 60.97%
Stocks Undervalued by 20% 18.84%
Stocks Overvalued by 20% 31.42%
SECTOR OVERVIEW