Show BUSINESS t tI and the I MA TURNAROUND IN HOUSING DEVELOPING Over the past couple of years ears the housing industry has been hit by the worst slump in recent history Seasonally adjusted new housing st starts from a million annual rate at the opening of 1973 to units at the end of 1974 In just the last year actual housing starts suffered the sharpest year-to-year year decline In three decades dropping almost 35 percent from the 1973 level And there is little indication the plunge has ended Housing lousing starts in January topped lopped the December low by 13 percent but the seasonally adjusted annual rate of new building permits permits-a a signal of future activity fell activity fell to the low lowest st point since records were begun in 1946 A spokesman forthe forthe for forthe the Rational National Association lon of Home Builders thinks w we we will be lucky if housing picks up by mid midyear year Stage Set For Gradual Recovery There are many reasons for housings housing's sorry state Tight money inflation high interest rates skyrocketing building costs a slumping economy rising unemployment and depressed consumer con con- Furthermore a large supply of unsold new homes overhangs the market presenting an added obstacle to a quick comeback Yet despite the depressed state of the housing industry and the grim rim immediate prospects there are a few positive signs on the horizon term Short-term interest rates in the open market have been trending trending trending tren tren- ding downward since late last summer Major banks have recently cut their prime lending rates to 8 4 8 percent As a result federally insured Savings Loans' Loans net savings inflow rose roseto roseto roseto to a record near-record billion in J January nuary up from million in December and billion in Jan January ry 1974 Jf lf past history provides any clue any clue the stage is being set for a recovery in homebuilding Always before a climb in savings deposits has hass meant more mortgage funds stimulating housing Sharp Upturn Unlikely While we expect a gradual recovery in homebuilding in thelast the last last half half of 1975 we do not foresee a rapid return to the 2 year units pace of the early The quick rise in inthe inthe inthe the price of housing median price for a home is now over has eli eliminated many potential buyers No-growth No policies in some communities are a restrictive influence Recession uncertainties uncertainties un un- certainties and unemployment deter still more possible home buyers Nevertheless the Research Staff of Babson's Reports expects 1975 to see at least partial recovery for housing so recommends purchase at this time of the following four stocks related to the industry Champion International is a major manufacturer and distributor of building products and paper as well as carpets and furniture The common stock is very low in relation to past prices and present earnings and in out opinion has substantial recovery potential Giant Portland Cement is a well-managed well regional cement producer operating in the rapidly growing Southeastern markets In recent years it has outperformed many larger competitors in terms of profit margins return on stockholders' stockholders equity and earnings Manville Johns is the worlds world's largest of asbestos products It is is also a major supplier of construction materials including ceiling tiles insulating board glass roofing and siding It is making quick gains in fiberglass production Industries is a well well- diversified dm company producing an extensive line of glass chemicals coatings regins and fiberglass Its strongest markets are in residential and commercial construction transportation chemical processing and petroleum refining Its longer term longer term prospects appear to be bright If Jf you would like a free detailed report on any or all of th these se four recommended companies write to Babson's Reports Inc Wellesley Hills Massachusetts |