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It might be a little premature to buy a home builder now, but if you must, I recommend MDC Holdings (MDC). MDC builds homes mostly in Colorado, Northern Virginia, suburban Maryland, Phoenix, Tucson, Las Vegas, Jacksonville and Salt Lake City and to a smaller extent in California.

While most of the home builders like KB Home (KBH), Lennar (LEN), Centex Corporation (CTX)and D.R. Horton Inc. (DHI) trade at PEG ratios well below 1, MDC is one of the lowest at 0.45. Also it has higher operating margins than those mentioned above (except DHI) and has less debt relative to cash than its competitors.

The most intriguing fact about MDC is the fact that it trades below book value. Book value generally acts as a bottom for stocks, and oftentimes indicates a buying opportunity.

In fact the only homebuilder with a market capitalization similar to MDC that is cheaper than MDC is Hovnanian (HOV), however, they have a much higher Debt/Cash ratio. Additionally, MDC pays out a dividend of over 2%, not too shabby for patient investors waiting for things to get better in this market.

The stock has run up about 7% in the last couple of weeks, and I am still cautious about buying anything related to housing, but if you are desperate to buy one, MDC is the one I recommend.

MDC 1-yr chart:

Source: MDC Holdings Trades Below Book Value