Why Did Homebuilding Stocks Surge?

When you buy stock in a corporation, you theoretically are buying rights to a slice of that company’s future profits. So how do you value a stock when those profits are almost nonexistent, both now and for the foreseeable future?

Some of homebuilder stocks’ rally could be explained by the stabilization of certain economic measures. But, the data haven’t changed that quickly. Nor is a better economy or a stabler housing market likely to translate into significantly better homebuilder earnings for quite some time.

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