Yeh, good luck with Meritage. Home values in the developing areas of Arizona (outskirts of Phoenix) where Meritage is building are ridiculously cheap. Why would someone build a new home in a Meritage community for $150k (which Meritage is barely breaking even at), when they can go a block away and buy a barely lived in, just as high quality 2 year old home for $90k or even less. No high hopes for MTH. All runs in this stock look like short squeezes to me.
Power Trader, Good luck. You must hold more shares than me. A lot more.......... One of Arizona's most well branded and affordable builders just filed 11. Their downfall was probably land ownership and inventory levels that did not come down. A significant investor told me that he believes we have not seen anything yet. I dont want to believe him but in a way I do. I see so many friends and colleagues preparing for bankruptcy and these are people that were prepared for at least a reasonable down turn. They have exhausted everything. If it gets worse we are in deep trouble. He said the only money that should be in builders is monopoly money unless you have very very aggressive tastes. I think most of the future is dependent upon how we deal with individual debt. I sure hope for everyones sake that the homebuilding industry can gain some traction.
How on earth do you justify this price when sales are down 59 percent 4th quarter vs last year. Compare tis to the industry leaders. They are going to eventually find a baseline based on market share and three year projections. This is a good place to establish a reasonable value for the company. It will not be a V bottom. Look at historical charts post economic trauma, it's a ten year base. Their shift to low revenue producing, low priced housing may not be the answer. Where is this product built? Certainly not infill. KB has had success and Davis hails from the lower ranks of the company so I figure this is how this plan came together. But do they have the might, the shareholder support and the dollars to brand themselves as the new KB? Do buyers really want to expose themselves and be this far out after the last oil hike? The carnage in these communities is far from over. Meritage may betting on government intervention and FHA tax credits to make this work. Way too many contingencies and a sloppy, knee jerk business plan IMO. They built this company from building luxury product in Phoenix or Scottsdale? and merged with Legacy. If they do not return to high margin product, raise massive capital and take advantage of struggling condos and high rise structures, they might be reduced to a zero growth stock. The builders like Toll will have buying power and the support of the banks and the established name in the luxury market. Smaller more flexible builders will fill the coming surge of infill buyers taking advantage of the coming wave of "green" tax credits. I agree that it will be at minimum half a decade before production building is going to need to be ramping up. Smart money is betting on this as I type. The consensus of our investors and the hyper demand of our opportunity fund suggests this anyway.