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Meritage Upgraded to Strong Buy

Zacks Equity Research

On Jul 10, Zacks Investment Research upgraded Meritage Homes Corporation (MTH), one of the largest home building companies in the United States, to a Zacks Rank #1 (Strong Buy), ahead of its second quarter results on Jul 24.

Why the Upgrade?

Meritage is expected to report solid top-line growth in the upcoming quarter. The company expects to benefit from the steady and broad-based housing market recovery, which continues to boost both demand and prices despite recent concerns over rising interest rates. In fact, Meritage has been witnessing double-digit surprise for the past four quarters with an impressive average beat of 68.08%.

Meritage beat the Zacks Consensus Estimate on both counts in the first quarter of 2013.  The company witnessed double-digit year-over-year growth in home closing revenues, prices and net orders in the quarter.

The company expects 40% to 45% year-over-year increase in revenues for each of the remaining three quarters of 2013. Earnings per share are expected in the range of $2.20 to $2.45 for 2013, which marks a stunning 350% – 400% increase in pre-tax earnings. The company expects to end 2013 with 185 active communities. The company further intends to invest up to $600 million in land development in 2013.  

Other Stocks to Consider   

Other stocks in the homebuilding sector that are performing well and deserve a mention include D. R. Horton Inc. (DHI), Ryland Group Inc. (RYL) and Taylor Morrison Home Corporation (TMHC), all carrying a Zacks Rank #1 (Strong Buy).  

Read the Full Research Report on DHI

Read the Full Research Report on RYL

Read the Full Research Report on TMHC

Read the Full Research Report on MTH

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