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On Jul 10, Zacks Investment Research upgraded Meritage Homes Corporation (MTH - Snapshot Report), 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 - Analyst Report), Ryland Group Inc. (RYL - Snapshot Report) and Taylor Morrison Home Corporation (TMHC - Snapshot Report), all carrying a Zacks Rank #1 (Strong Buy).  
 

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