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June 14, 2006 Stock Pick: WCI Communities, Inc. (WCI)

Stock Price: $18.01

WCI Communities, Inc., named America's Best Builder in 2004 by the National Association of Home Builders and Builder Magazine, has been creating amenity-rich, master-planned lifestyle communities since 1946. Florida-based WCI caters to primary, retirement, and second-home buyers in Florida, New York, New Jersey, Connecticut, Maryland and Virginia.

WCI is trading at a P/E of only 3.95 and a PEG ratio of 0.38 compared to the industry average of 3.40. WCI is currently trading over $6.00 below its book value of $24.80. WCI is undervalued on a P/S basis as well trading at only 0.30 times sales.

Sure the home building market hit a slow down, but this home builder stock is one of the most oversold stocks we have seen in a while. WCI is currently trading at a relative strength index of 18.58. To put this in perspective, WCI would be over bought above $30.00.

We love the business of WCI with all the baby boomers retiring over the next few years. Those retiring in northern states like New York, Pennsylvania, New Jersey, Connecticut will be looking to move to a warmer climate. Investors will begin looking at this when analyzing WCI instead of short-term forecasts.

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