A housing stock for this stage of the cycle
Looks like Radian stands to give you the most bang for your buck as it is about to explode into profitability.
Yep, I have heard the housing cycle batted around like this now for months, ever since the first interest-rate shock. Richard Smith -- the CEO of Realogy (RLGY), the largest real estate broker in the country, with 26% of all transactions -- believes we are still in the early innings for existing homes.
Smith said as much Wednesday night on my "Mad Money," show, pointing out that there hasn't been too much pushback from existing-home buyers because they can lock in rates. The pent-up demand is too great, and the credit is starting to flow in better fashion now than it had done when I'd spoken to him earlier in the year. If rates do go a great deal above 5%, then the calculus will change. Until then, the current quarter is going to be a strong one, and the fourth quarter should be, too.
But here's what I thought was a more interesting takeaway from Smith's comments: New-home construction will not do as well due to the difficulty to lock-in rates for an expanded period of time. In other words, the new-home market, and specifically the builders, are in the penalty zone because of the rapid changes in rates, so they can't do as well as you would like if you wanted to play the housing cycle.
Now, I know many critics of Realogy think the business has peaked and that transactions are going to decline and that the best salespeople are taking too much commission away from the parent.
Others who know this cycle well, including hedge fund manager John Paulson, think there's a lot more to the story.
But if you believe existing-home sales will continue increasing as rates settle down or go up more gradually, and if you don't want exposure to a real estate brokerage company, I think you should come down on the side of Radian (RDN). This is the real estate mortgage insurer that's just now coming out of the difficulties it has had, and it is about to explode into profitability. My colleague Doug Kass has been writing about this one for a while, and he's been dead right about housing.
Radian's got decreasing competition -- the Federal Housing Administration is pulling out -- as well as a much better balance sheet to write more insurance, and an improving default rate.
So if Smith is right, Radian -- not the homebuilders, and not Realogy -- may be the most bang for the buck that you can get at this stage of the cycle.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
More from TheStreet.com
LITTLE ROCK, Ark. (AP) - A New York broker pitching stock to strangers over the phone happened to cold call an examiner with the Arkansas Securities Department and wound up losing his registration.
The department said Thursday that it revoked the registration of Junmo Hong of New York-based John Thomas Financial for securities fraud and other alleged violations.
The department said Hong "made unfounded representations" about a stock and falsely claimed to have spoken to the prospective client several times in the past. The agency says one supposed call in 2006 would have been when Hong was 14 years old.
Hong signed a consent order acknowledging the violations. Hong doesn't have a listed phone number and calls Thursday to John Thomas Financial did not go through.
Hong was also cited for violating Arkansas' do-not-call list.
SWEET IRONY... Hong learned from the Fat Cat School of Baloney Making.
Sadly, traders followed the pattern they set 3 weeks ago. MSN please expose this
manipulation in an article, This is outrageous!!! Traders treat the Markets as if they owned them.,
i would think now is a good time to buy and hold real estate stock. collect on dividends, let the equity grow, things are turning around for the better. it's not going to be a big bang growth, but certainly not at zero or negative.
but apparently cramer's reputation of recommending dog stocks makes it sound like now is the time to SELL his radian and realogy stock.
Ahhh, problems and headwinds ahead, even probably for the Good Ship " USS Money Bags".
Lying "scumbag realtors" comes to mind, the "new used car salesman" in better clothes.
Then the "unscrupulous bankers and mortgage companies."
We have a ton of empty houses still...Drive and see..
We have plenty of "tax sales and shadow inventory of foreclosures."
And then we have "Foreign investors, buyers, landlords and flippers," coming back into Markets.
We were forewarned by many of "housing lagging indicators."
We were forewarned by many of "good jobs lagging indicators."
For God's sake don't be taken-in by Charlatans....You have been FORWARNED...!!!
Make the bastards pay you for a change...Make the "best deals."
Lowes has a better selection of metal washers than Home Depot.
Going to casino Sunday to pick up $10 free slot play.
Just talking to my self...."Self how you doing?"...."don't really know, but will probably feel better after going to Vet's Club and discussing the crop yields"...None of them know shidt about Wall Street.
And check to see how cold the beer is.
>40 cents is .40 cents ICE, Think Buffet started out that way..?
I don't cut and paste either...Can't figure it out...My memory and knowledge is still retainable; YET.
But that's probably obvious by now..
My biggest worry today....Is where will I get my $1 double cheese burger...Screw'em.
Hope they do get more money..
Ice Cold....Hope you have noticed Northern Tier (NTI)??
Got a "fat" dividend last night....But they have about shanghai'd me.
Down a buck or so, and they dropped the div lower...Screw'em just like Casinos..
Now I have to wait them out...
COP is doing fine tho'.
The 2nd Casino I went to a couple days ago...I had a $25 free play(no match)...
Put it all on Black, straight up.....Not allowed on "odds pay" play..
Red 16....Screw 'em.
Got a "free" coffee or coke and left..
Already had lost most everything else, different place....Screw'em all, but 7.
Last 4 trips have lost on 3....Screw'em, getting just like Miss Lilly.
Hell we are reading the Column of "one" of many (dozens/hundreds) MANIPULATORS...
We don't have to go far....None of us are DAFT yet, are we ??
Although I may be close...? GET OFF MY ROAD !!!...(no peeing here).
Long time ago I had blackjack basic strategy memorized, but it took me two years. I decided to just take a strategy chart to the tables and invest my time elsewhere. The casinos don't care, but other players start asking you how to play their hands. Igits.
I try to stay away from slots and video poker except in Vegas. In the Indian casinos the machines are "video lottery terminals." It's almost impossible to find out anything about video lottery terminals, but an "insider' once told me that they work similar to pull tabs.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Even if you're a full-on bull for certain picks, it's helpful to know how negative the bets are against them.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.