Hovnanian (HOV) Flagged As Strong On High Volume
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
(
) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Hovnanian as such a stock due to the following factors:
- HOV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.7 million.
- HOV has traded 308,647 shares today.
- HOV is trading at 5.03 times the normal volume for the stock at this time of day.
- HOV is trading at a new high 3.24% above yesterday's close.
'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.
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More details on HOV:
Hovnanian Enterprises, Inc. designs, constructs, markets, and sells residential homes in the United States. It constructs single-family detached homes, attached townhomes and condominiums, urban infill, and active adult homes. HOV has a PE ratio of 1.9. Currently there is 1 analyst that rates Hovnanian a buy, 2 analysts rate it a sell, and 3 rate it a hold.
The average volume for Hovnanian has been 2.4 million shares per day over the past 30 days. Hovnanian has a market cap of $454.7 million and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.67 and a short float of 12% with 7.40 days to cover. Shares are down 17.7% year-to-date as of the close of trading on Wednesday.
Analysis:
rates Hovnanian as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 0.0%. Since the same quarter one year prior, revenues rose by 18.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 882.5% when compared to the same quarter one year prior, rising from $32.82 million to $322.46 million.
- Net operating cash flow has increased to $68.96 million or 21.69% when compared to the same quarter last year. Despite an increase in cash flow, HOVNANIAN ENTRPRS INC's average is still marginally south of the industry average growth rate of 27.84%.
- HOV's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 32.36%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for HOVNANIAN ENTRPRS INC is rather low; currently it is at 19.19%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 46.17% has significantly outperformed against the industry average.
- You can view the full Hovnanian Ratings Report.
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