Toll Brothers Inc (TOL), PulteGroup, Inc. (PHM), Lennar Corporation (LEN): Should You Buy these Home Builders?

Lennar Corporation (NYSE:LEN) engages in the building of single-family attached and detached homes throughout the United States. The company currently owns 107,138 home sites and had access through option contracts to an additional 21,346 sites.

Lennar Corporation (NYSE:LEN) also reported strong results in the most recent quarter, with net earnings of $0.26 per share versus $0.08 in the same quarter last year. Operating margins improved by 4.1% and selling, general & administrative expense as a percent of revenue declined by 2.9%. The company’s backlog in dollar terms was up 105% versus the prior year. The company spent almost $500 million on land acquisitions in the quarter and believes it is well positioned for 2013 and 2014; it is now focused on acquisitions for 2015 development. Lennar Corporation (NYSE:LEN) issued $450 million of new debt in the quarter to finance future growth.

Time to buy?

All three of these companies have enjoyed recent success and seem confident about the future. The companies have made sound capital decisions, issuing cheap debt in low interest rate environments and taking advantage of increased housing demand and low mortgage rates. All three have significant backlogs and continue to make land acquisitions for future development. They have also witnessed margin expansion and believe this trend can continue.

Despite looming increases in mortgage rates, demand is expected to continue for new homes. As the market continues to recover, these three companies look poised to benefit and can make solid additions to your portfolio.

The article Should You Buy these Home Builders? originally appeared on Fool.com and is written by John Timmes.

John Timmes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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