M/I Homes, Inc. (NYSE:MHO)

I firmly believe now is the time to start going long home builder stocks. This sector has been absolutely destroyed the past several years and there continues to be a lot of bad press out there; however, this trend can't remain forever. I am not advocating that we are going to go back to the "glory days" of flipping crappy houses and buying McMansions with no proof of income etc., but people still need a place to live.

One of the largest misconceptions out there is that Home builders can't make money unless the RE market in the US returns to the 2004-2006 era. This is simply not true. What many people forget is that as the average home price has indeed collapsed, so have the input costs and builders are making some insane profit margins right now and should continue to do so going forward.

I'm not going into any specific details for MHO other than that it is towards the top of my list because it has a rock solid cash position and has some of the best land in the country. The best HB stocks will clearly outperform, but this is also a sector bet as well. For more thoughts on my general stance on Home Builder stocks see here: http://caps.fool.com/Pitch/MDC/5078974/yes-fools-you-are-seeing-that-.aspx

I don't expect instant results, but I am currently dipping my toes in the water and buying select HB stocks and I will continue to do so on any dips etc. 5+ years from now, you will be rewarded. Patience is a virtue.