If we look at the chart, things do not look so rosy but we might have a heck of a bounce first (nice double bottom forming for those with brass cajones) ;)
- Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, could go out of business “absent a miracle” bolstering its equity and cash reserves, bond analyst Vicki Bryan said today. Hovnanian denied it was in trouble.
- “In 2008, builders generated billions of dollars in tax refunds, asset sales and in savings by not buying land for development,” Bryan, of New York-based Gimme Credit LLC, wrote in a report today. “These lucrative sources will not be available on the same scale this year, and there is little room to cut costs as revenue declines further.”
- Hovnanian’s market value has tumbled 98 percent from its peak on July 20, 2005. The builder was last profitable in the fiscal first quarter of 2007.
- “It seems odd that an analyst would not understand that we ended fiscal 2008 with over $800 million in cash and only have $100 million of debt maturing before 2012,” Hovnanian Chief Financial Officer Larry Sorsby said in an e-mail today. “We have weathered many industry downturns during our 50-year history and strongly believe we have the liquidity to weather the current downturn as well.”
- Bryan, in her report, also mentioned Beazer Homes USA Inc., an Atlanta-based homebuilder whose market value has plummeted 99 percent since January 2006 to $44 million.
- “Hovnanian and Beazer could fail in 2009 absent a miracle, and soon, that would shore up cash and equity,” she wrote.
- Standard & Poor cut Hovnanian’s credit rating Dec. 5 to “selective default” after the company raised $29.3 million of a planned $250 million in a bond exchange of new third-lien 18 percent secured notes. The New York-based ratings company said it moved Hovnanian off its credit watch list with negative implications.
If these stocks somehow exist when the housing "rebound" happens, these are exactly the type of stocks that can make you a ton of money in a very short period of time; or erase all your capital. Or you could go to Vegas (they need your business) and just put it all on black. Or red.