Mr. Sroka: Year to date the eight homebuilding companies that we follow have appreciated approximately 50%.
TWST: So they've had a good year. Does that reflect what's going
on in the housing market?
Mr. Sroka: The housing market has been good, but the performance
of the stocks has actually exceeded that of the housing market.
The companies have continued to increase market share. What we
see reflected in their earnings, and then, ultimately, their
stock prices, is their ability to grow market share.
TWST: What is it about those companies that allows them to gain
share?
Mr. Sroka: The larger homebuilding companies are gaining market
share as they expand their operations into new markets as well as
gaining share within existing markets. This is achieved by
opening new communities where consumers can purchase homes, not
dissimilar from a retailer opening more stores. Think about a new
homebuilding community, for a minute, not as a location where
homes are being built, but rather as a location where a consumer
would go to purchase a home. If a company like Centex (CTX) or
Lennar (LEN) has more of those 'stores' open around the United
States over a period of time, they have that many more locations
where a consumer can go to purchase one of their homes.
Tickers included in this excerpt: BZH, CTX, CXP, DHI, KBH, LEN, MDC, PHM, TOL
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