Hovnanian Enterprises, Inc. (HOV)

snoopyj (< 20) Submitted: 11/17/06 4:53 PM : Start Price: $31.92 HOV Score: -54.34

Hovnanian Enteprises controls about 120,000 lots, which is approxiately five years' supply, providing opportunities for future growth. While backlog orders are valued at approximately $3.6 billion on 10,000 homes, near-term results will be easier to foreacast. The company is expereienced in redeveloping old residential neighborhoods in urban locations. These locations will benefit from demographic changes in the coming years, younng professionals and empty-nesters who wish to move into the city. Hovnanian recently acquired an Ohio-based builder, improving its capabilities to serve the Midwest region of the U.S. Debt ratings are expected to improve in the medium term because creditors will be more familiar with the company's use of JVs and land options, resulting in lower borrowing costs for the company.

Homebuilding revenues are expected to increase between 14-15% per annum in the future. This is lower than 37% annual growth rate in the past five years. However, consolidation will improve the homebuilding industry, allowing the company to pursue aggressive acquisitions.

Target Price: $60.00
52 Wk High: $54.59 (-41.4%)
52 Wk Low: $24.79 (29.1%)

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