Ryland Shares - Update

   Last week, I mentioned that Ryland was my favorite housing stock. I also mentioned that I wasn't buying yet because I don't buy on weakness but on strength. When I wrote my post last week, Ryland shares were trading at around $16.50. Today, those shares are down to $14.98 because of a middling earnings report earlier in the week. From Reuters:

http://www.reuters.com/article/idCNN2812963920101028?rpc=44

Oct 28 (Reuters) - Shares of Ryland Group Inc (RYL.N) fell on Thursday, the day after the seventh-largest U.S. homebuilder reported a quarterly loss and a 37 percent drop in orders. Ryland shares were down 4.5 percent at $15.20 in midmorning trading on the New York Stock Exchange, compared with a 0.9 percent dip in the Dow Jones U.S. Home Construction Index .DJUSHB.

    The shares are off about $1.50 from last week. So, am I looking to scoop any shares up NOW? Not yet. As I've mentioned before and I'll mention it again in the future, I don't start a position on weakness. I know that the shares are a nice bargain now compared to last week but there's a chance that prices will be discounted further in the next 1-2 months. I'm a patient investor and my time horizon is usually a minimum of 5 years. I do have a price in mind where Ryland shares would be so compelling that I'd have to break my buying rule and start a small position. In general however, I'm looking to buy size in Ryland only on strength.

My Favorite Housing Stock

   Nah, it's not Toll Brothers or D.R. Horton nor Pulte Group. My favorite home builder stock is Ryland (RYL) which I've followed and traded since the 90s. Their profile is as follows:

The Ryland Group, Inc., together with its subsidiaries, operates as a home building and mortgage-finance company in the United States. The company’s operations cover various aspects of the home buying process, including design, construction, and sale. It offers single-family detached homes; and attached homes, such as town homes, condominiums, and mid-rise buildings, as well as sells land and lots. The Ryland Group also provides mortgage-related products and services, as well as title, escrow, and insurance services to its homeowners and subcontractors. It markets its homes to entry-level, and first and second-time move-up buyers. The company was founded in 1967 and is headquartered in Calabasas, California.

   Ryland's near 52-week lows so I'm not buying now. I do think ~$16 is a good price for each RYL share but as mentioned before, I normally don't buy on weakness. I prefer to buy as a stock goes up and then pyramid the position as higher prices lead me upwards. The market's pulling back today but housing stocks are nursing middling losses. This doesn't mean anything based on a 1-day snapshot but I am of the opinion that housing stocks will recover way before the real estate market recovers and they're my indicators for the impending real estate recovery.