We saw here that there are home builders trading at huge discounts to their book values. Could some of these offer a chance to buy land at a big discount? It's worth taking a deeper look at some of these issues. If they are leveraged to the hilt, they might not be as attractive as they seem. So here's a second look at this list, but this time including each company's debt to capital ratio:

Clearly, many of these companies are leveraged to the hilt. I don't think it was their original intentions to have so much debt, but recent writedowns have probably forced them into this situation.

Notice Cavco (CVCO) has no debt on its books. A company in this condition is able to weather cyclical downturns fairly easily, and that's one of the reasons we prefer companies with little debt. Notice, however, that it's trading to a 73% premium to book value, so it's not immediately obvious whether its trading at a discount to its intrinsic value.

The companies that look somewhat appealing in this chart are M/I Homes (MHO), followed by Lennar (LEN). They trade at significant discounts to book, with debt to capital in the 30% range. Might be time for a closer look!

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