Stock Strategist: Are Homebuilders Worth More than Book Value?

Byline: Eric Landry

Oct. 6--As a value investor, you've probably looked at homebuilders a few times over the past several years and marveled at just how cheap these stocks have been. Recently, the reason for such a valuation is glaringly obvious: The next few years' earnings aren't going to come close to what the group made in 2005, and the market is simply doing its job of discounting the forward results of an extremely cyclical group.

True, the next few years are going to be ugly. But there's something more at work here, as builder multiples (price/book,