Place your bets on the Homebuilders (Z,DHI,KB)
The 3 stocks we recommend looking at are Zillow (Z), D.R. Horton (DHI) and KB Home (KBH). The data should give a strong indication of the end of the spring home selling season, which by many accounts, was stronger than expected.
New-home sales, also coming Wednesday, could spike by 8% to 355,000 units annualized from 328,000 units in March, writes Credit Suisse, which is far more bullish than consensus for a gain of 2%.
“Our estimate is based on our market checks along with the higher single-family construction in April (census new-home sales data typically follow moves in starts/permits) as well as the upward revisions to recent months for construction,” the firm writes. “This, coupled with a seemingly anomalous 7% decline in reported March new-home sales (which was in contrast to our market checks and comments from public home builders) should lead to a pop in reported April sales.”
Now let's get to the stocks.
Zillow (Z) had a great Q1 earnings call, where shares jumped from $34 to $43 over a couple of days. However, Zillow shares went into freefall over that last week, giving back most of the gains as market volatility picked up and the Facebook IPO flopped.
Zillow is a little risky here because one could argue that Zillow rose so much recently because of the Facebook IPO. So proceed with caution - risk should be pretty easy to manage here since it's trading very close to the 50 day moving average, and the chart is printing a huge hammer candlestick today. If the bulls fumble the ball on this one and can't keep the share price above the 50 day MA, have an exit strategy in place.
D.R. Horton (DHI) has held up fairly well during the turmoil in the market over the last few weeks. It's trading right in the middle of a rising channel - we expect shares to pop to $18-$19 if housing data is good and down to $15 or lower if the data is bad.
KB Home (KBH) was recently downgraded by Barclays from $15 to $10. Shares made it all the way to $13 in April before crashing back down to $7.20 today. KBH could get a quick pop on good Housing News but don't hold on to your shares for too long.
Best of the Blogs
Scanning and identifying the best blog entries every hour
- THe SCaReCRoW OF THe PaCiFiC... | ZeroHedge
- The Gap Betweeen GAAP And Non-GAAP In Two Charts | ZeroHedge
- Get Ready for Europe to Print – Core Euro CPI Annual Rate Matches Multi-Decade Low | Financial Sense
- Just Because Tech Stocks Are Cratering, That Doesn’t Mean They Ain’t Cool | iBankCoin.com
- WTF Headline Of The Day: Justin Bieber Visits Japan's Yasukuni War Shrine | ZeroHedge
- The Chinese Housing Ponzi Exposed: "As We Sell Our First Apartments, We’ll Have Cash Flow To Build The Next Stage" | ZeroHedge
- U.S. Hegemony, Global Flashpoints, and Military Spending | Financial Sense
The most relevant financial news and articles from the Internets
- Satya Nadella: Microsoft Plans To Offer Windows For Wearable Computers (MSFT) | Business Insider
- Facebook Sees A Big Beat On Profits But Desktop Business Is In Decline (FB) | Business Insider
- Larry Page Tried To Sell Google... | Business Insider
- It Looks Like We Just Got A Hint About How Big Chipotle's Price Hikes Are Going To Be | Business Insider
- Satya Nadella: Microsoft Will Show 'Courage In The Face Of Reality' (... | Business Insider
- Here's How Many People Really Use Sketchy Streaming Sites — And Why | Business Insider
- Jim Cramer on Caterpillar, American Airlines and Apple Earnings | TheStreet.com