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One of the leading homebuilders in the U.S, PulteGroup Inc. (PHM - Analyst Report) reached a 52-week high of $20.54 on Jan 17, 2013.

PulteGroup, on the back of its significant land positions, broad geographic and product diversity, and better capital position, is gaining momentum from the fast improving housing fundamentals. With the housing recovery, there has been a drop in inventory levels and an increase in home prices.

PulteGroup has been witnessing increasing earnings estimates, before the release of its fourth quarter 2012 earnings. The upward movements of the estimates reflect rising expectations for significantly higher year-over-year earnings growth rates in fiscal 2012 and 2013. The long-term expected earnings growth rate for this stock is 10.00%.  

Pulte has witnessed solid year-over-year growth in new home orders, average selling prices and home closings for the past two quarters. Margins have also been healthy, driven by pricing benefits, operating efficiency improvement initiatives and a better mix of sales, particularly of move-up homes.

Pulte has delivered positive earnings surprises in three of the past four quarters with an impressive average earnings surprise of 77.5% in the trailing four quarters.

We are encouraged by Pulte’s solid third quarter results and bullish growth projection for the upcoming quarters, backed by gradually recovering homebuilding market.

Other Stocks to Consider

With the housing market recovering steadily, many other stocks in the homebuilding sector are currently performing well. These include Meritage Homes Corporation (MTH - Snapshot Report) and MDC Holdings Inc. (MDC - Snapshot Report) both with Zacks Rank #1(Strong Buy) and The Ryland Group, Inc. (RYL - Snapshot Report) and NVR, Inc (NVR - Snapshot Report) both having a Zacks Rank #2 (Buy).
 

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