Raising The Roof At U.S. Home

Investment manager Ed Wachenheim looks for value stocks that are "dirt-cheap" but of "good to excellent quality." He pays particular attention to the quality of management. Based on the five stock picks discussed in this column over the past three years, his technique has done well: Mellon Bank achieved a 147% gain; disability insurer UNUM jumped 119%; Security-Connecticut life insurance, 61%; and Allmerica Financial, 29%. Even Ford is up a modest 14%.

The latest pick of Wachenheim, CEO of Greenhaven Associates in Purchase, N.Y., is U.S. Home (UH), a low-profile builder. Until lately, the company has been a wallflower. But to make itself more visible on Wall Street, it has arranged an all-day meeting with analysts on Mar. 5 at a retirement community that U.S. Home has built in Jamesburg, N.J.

"This event alone should kick up the stock, since it will be the first time that the Street will get a handle on how well U.S. Home is doing," says Wachenheim. The stock, now at 26 a share, should hit 40 to 44 by mid-1998, he figures, based on his 1998 earnings estimate of $4 a share. In 1996, U.S. Home earned $3.25, fully diluted. For 1997, Wachenheim sees $3.40.

Arizona, Florida, and Texas account for 53% of sales. The company develops retirement communities. Wachenheim expects that demand will grow rapidly as baby boomers age.

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