The Ryland Group, Inc. (RYL)

EScroogeJr (30.79) Submitted: 6/25/08 3:03 PM : Start Price: $25.05 RYL Score: -16.13

The investment thesis is based on the homeowner bailout that's coming soon, in a few days or weeks perhaps, but at any rate no longer than 6 months (we might have to wait till the inauguration in case the cowboy freaks out). The bailout will have a triple effect. First, instead of getting a foreclosure note, homeowners will laugh all their way to the bank, hence no inventory to compete with builders. Second, the market timers and bottom fishers will realize that all is lost, and the pent-up demand for hundreds of thousands of units will hit the market literally within 24 hours after the bill is signed. Third, prospective buyers will learn their lesson: buy a house, any house, at any price, and either you'll make lots of dough, or the government will rob someone more responsible than you to make your investment whole, and you'll make lots of dough anyway. RYL's houses are not cheap, which is another plus. The opportunities in the entry-home segment are closing rapidly, and the closer you are to TOL's luxury-home model, the easier it will be for you to adjust.

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