They ain't buiding any more (land) Would you like to be in a business where your product is sure to increase in price every year? In other words, you have pricing power. Even better, what if you had pricing power over your raw material inventory? Most firms use just in time inventory because it is normal for goods to decline in value over time. The business I am talking about is the Home Building industry, represented by such companies as Toll Bros and Centex. Read about this industry in a very perceptive article in the New York Times called Chasing Ground. Their are two main themes in the article: 1) Because of demographic and geographic trends, the price of land suitable for housing must increase over time. 2) Societal trends such as NIMBY (not in my back yard) and environmental concerns, means only large developers can afford lengthy zoning and litigation costs. For example, this quote:

Toll won its Princeton Junction case in 1997. "Essentially, we were awarded a builder's remedy," Yearley says, which means that the judge agreed that West Windsor needed more affordable housing and that Toll could build. The appeals, which went to the State Supreme Court, took several more years, but by 2002 Toll had won at every level and had a state-approved plan allowing for 1,165 housing units. Of those, 535 would be stand-alone luxury homes and luxury town houses; the other 630 units would be one-, two- and three-bedroom apartments, 175 of which would rent for below-market rates and therefore be designated as affordable housing. It took 10 years from the time Yearley bought the loans for the Princeton Junction land until the company was allowed to break ground. Even before a single bulldozer arrived to clear topsoil, the company's legal bill amounted to $2 million.

Read this excellent article, for it has important ideas for investors. Go to Yahoo and note the low p/e ratios of these companies. They offer good long term prospects, but suffer from investor expectaions of a real estate bubble, hence the low p/e ratios. But note that those low ratios also act as a cushion for long term investors. other companies to look at are DH Horton, Pulte and Lennar