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Two Ways: The Death of the McMansion?

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Strengthen your portfolio in good times and bad.

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KB Home (KBH), the fifth-largest US homebuilder, reported better-than-expected earnings after the company switched to a new line of smaller, cheaper units that give customers plenty of options in customization.

The company said its first-quarter loss was just $0.75 a share, $0.06 better than Thomson First Call estimates. Revenues fell over 60% year-over-year to $307.4 million, which was below expectations of $347.5 million. But, according to the Wall Street Journal, KB also had fewer writedowns, a reduction in cancellations and 26% spike in net orders.

In a conference call, President and Chief Executive Jeffrey Mezger said "homes must change with the times." He expects these new models to account for about 50% of deliveries by the end of 2009.

Shares of KB Home led the sector, gaining 6.29% to $15.05 in today's trading, while the broader Homebuilders ETF (XHB) fell 2.05% to $11.47.

See Professor John Mauldin's Buy a Home, Get a Green Card.

From the Bull Pen: The current rally still must be respected. Bulls can continue to use the S&P 500 Depository receipts (SPY) eyeing support near $79.

From the Bear Cave
: Bears can look to Simon Property Group (SPG). We know of the bleak housing picture, but technically this stock is very weak as well. Breaking below $32, it could see new lows in a short amount of time.

The feast continues on Fat Friday. Be safe and have a great weekend!



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No positions in stocks mentioned.

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