Trading 12 Homebuilders With Mixed Earnings and Housing Data

NEW YORK (TheStreet) -- The National Association on Home Builders Housing Market Index slipped by one point in January to a reading of 57.

The NAHB is confident that higher home prices and historically low mortgage rates, along with pent-up demand, will continue the gradual recovery in single-family housing starts as the year progresses.

Single-family starts remain above the 600,000 threshold as this key measure of the housing market declined to an annual rate of 667,000 in December from 727,000 in November. Both readings are below the more normal 1 million to 1.2 million unit range. Note that homebuilder sentiment continues to lead single-family starts. 

   

On Dec 19, I wrote, Homebuilders Rebound on Single-Family Starts, and since then, the 12 homebuilders have traded higher, led by D.R. Horton (DHI), up 16.8%, and PulteGroup (PHM), up 10.4%.

Last week, we learned that the 20-city component of the Case-Shiller Home Price Index rose by 13.7% year over year in November, but slipped 0.1% from October, suggesting that the uptrend for home prices may be peaking. I view this data as a warning that the re-inflation of the housing bubble is ending after a rebound of 23.7% since the March 2012 low. Since the June/July 2006, peak home prices are down 20%.

Beazer Homes (BZH) ($22.51 vs. $22.21 on Dec. 18, up 1.4%) reported quarterly results last Thursday and beat earnings per share estimates by 9 cents, reporting a loss of 16 cents a share.

The stock set its 2014 high at $25.34 on Jan. 3, and then traded down to $20.76 last Monday. It's above its 50-day and 200-day simple moving averages at $22 and $19.22. The weekly chart is neutral with its five-week modified moving average at $22.12 and the 200-week SMA at $18.07.

Beazer has a hold rating and is 57.6% overvalued with a gain of 19.6% over the last 12 months. Monthly and semiannual value levels are $18.87 and $17.69 with weekly and quarterly risky levels at $25.04 and $25.77.

D.R. Horton ($23.48 vs. $20.11 on Dec. 18, up 16.8%) reported its quarterly results last Tuesday, beating EPS estimates by 6 cents a share with earnings of 36 cents a share.

The stock spiked from its 2014 low at $20.20 on last Monday to its 2014 high at $24.00 on Friday, and is above its 50-day and 200-day SMAs at $20.71 and 21.06. The weekly chart is positive but overbought with the five-week MMA at $21.37 and the 200-week SMA at $15.87.

D.R. Horton has a sell rating is 27.2% and is overvalued with a loss of 0.8% over the last 12 months. My monthly value level is $17.14 with semiannual pivots at $22.46 and $21.42, a weekly pivot at $24.15 and a quarterly risky level at $28.19.

Hovnanian (HOV) ($6.03 vs. $5.71 on Dec. 18, up 5.6%) reports quarterly results on March 14, and analysts expect the company to lose 3 cents a share.

The stock traded at its 2014 high at $6.80 on Jan. 3 and then fell to $5.54 last Monday. It's above its 50-day and 200-day SMAs at $5.70 and $5.51. The weekly chart is neutral with its five-week MMA at $5.89 and the 200-week SMA at $3.95.

Hovnanian has a hold rating and is 5% overvalued. It's up 5.6% over the last 12 months. Semiannual and monthly value levels are $5.13 and $5.02 with a semiannual pivot at $6 and weekly and quarterly risky levels at $7.13 and $8.70.

KB Home (KBH) ($19.34 vs. $17.55 on Dec. 18, up 10.2%) reports quarterly results on March 20, and analysts expect the company to earn 7 cents a share.

The stock rebounded from $17 last Monday to $19.70 on Friday, and is above its 50-day and 200-day SMAs at $17.74 and $18.65. The weekly chart is positive with the five-week MMA at $18.11 and the 200-week SMA at $13.36.

KB Home has a sell rating and is 28.5% overvalued with a gain of 1.4% over the last 12 months. Monthly and semiannual value levels are $14.04, $13.60 and $12.58 with a weekly pivot at $18.83 and a quarterly risky level at $25.46.

Lennar (LEN) ($40.16 vs. $37.43 on Dec. 18, up 7.3%) reports quarterly results on March 19, and analysts expect the company to earn 28 cents a share.

The stock declined to $36.41 last Monday, and then rallied to $40.84 on Friday, above its 50-day and 200-day SMAs at $37.06 and $36.47. The weekly chart is neutral with its five-week MMA at $37.80 and the 200-week SMA at $26.30.

Lennar has a hold rating and is 12% overvalued with a loss of 3.3% over the last 12 months. My monthly value level is $33.64 with semiannual and weekly risky levels at $41.07, $43.94 and $42.08.

MDC Holdings (MDC) ($30.89 vs. $30.05 on Dec. 18, up 2.8%) reports quarterly results on Wednesday, and analysts expect the company to earn 62 cents a share.

The stock traded as high as $32.68 on Dec. 30, and traded as low as $28.90 last Monday. It's between its 50-day SMA at $30.30 and its 200-day SMA at $31.73. The weekly chart is neutral with its five-week MMA at $30.56 and the 200-week SMA at $29.13.

MDC has a hold rating and is 12% undervalued with a loss of 21.4% over the last 12 months. My semiannual value levels are $28.38 and $27.72 with weekly and quarterly risky levels at $32.02 and $48.45.

M/I Homes  (MHO) ($24.59 vs $23.57 on Dec. 18, up 4.3%) reported its fourth-quarter results last Wednesday and missed fourth-quarter EPS estimates by 13 cents, earning 49 cents a share.

The stock traded at its 2014 high at $26.30 on Jan. 10, and then as low as $22.90 last Monday. It's now above its 50-day and 200-day SMAs at $23.63 and $22.42. The weekly chart is positive but overbought with its five-week MMA at $23.99 and the 200-week SMA at $16.12.

M/I has a sell rating and is 14.7% overvalued with a loss of 9.7% over the last 12 months. My monthly value level is $19.74 with semiannual pivots at $23.43 and $26.18 and weekly and quarterly risky levels at $27.29 and $33.61.

Meritage Homes (MTH) ($48.57 vs $44.12 on Dec. 18, up 10.1%) reports quarterly results on Wednesday, and analysts expect the company to earn $1.02 a share.

The stock traded down to $44.07 last Monday and then went up to $49.07 on Friday, above its 50-day and 200-day SMAs at $44.74 and $44.60. The weekly chart is positive with its five-week MMA at $45.72 and the 200-week SMA at $30.40.

Meritage has a hold rating and is 4.8% undervalued with a gain of 9.8% over the last 12 months. Monthly and semiannual value levels are $42.77 and $40.30 with a semiannual pivot at $46.19 and weekly and quarterly risky levels at $49.77 and $58.04.

PulteGroup ($20.32 vs. $18.42 on Dec. 18, up 10.4%) reported quarterly results last Thursday and beat EPS estimates by 10 cents, earning 57 cents a share.

The stock traded down to $18.21 last Monday and then up to $20.78 on Friday, above its 50-day and 200-day SMAs at $19.06 and $18.60. The weekly chart is neutral with its five-week MMA at $19.29 and the 200-week SMA at $11.95.

Pulte has a sell rating and is 33.2% overvalued with a loss of 2% over the last 12 months. Semiannual value levels are $16.30 and $15.16 with weekly and quarterly risky levels at $20.88 and $26.95.

Ryland Group (RYL) ($44.64 vs. $40.75 on Dec. 18, up 9.5%) reported quarterly results on Thursday and beat EPS estimates by 11 cents earning $1.28 a share.

The stock held its 50-day and 200-day SMAs at $40.64 and $40.71 last Monday and traded up to $45.44 on Friday. The weekly chart is positive with the five-week MMA at $41.95 and the 200-week SMA at $25.41.

Ryland has a sell rating and is 50.3% overvalued with a gain of 12.4% over the last 12 months. My semiannual value levels are $36.78 and $34.45 with weekly and quarterly risky level at $46.91 and $55.45.

Standard & Pacific (SPF) ($8.80 vs. $8.31 on Dec. 18, up 5.9%) reports quarterly results on Wednesday, and analysts expect the company to earn 14 cents a share.

The stock set its 2014 high at $9.16 on Jan. 3 and then traded as low at $8.16 last Monday. It's above its 50-day and 200-day SMAs at $8.43 and $8.27. The weekly chart is neutral with its five-week MMA at $8.53 with the 200-week SMA at $5.55.

Standard & Pacific has a sell rating and is 46.7% overvalued with a gain of 6% over the last 12 months. My monthly value level is $7.67 with semiannual pivots at $8.36 and $8.89 and weekly and quarterly risky levels at $9.16 and $11.87.

Toll Brothers (TOL) ($36.75 vs. $34.61 on Dec. 18, up 6.2%) reports quarterly results on Feb. 19, and analysts expect the company to earn 18 cents a share.

The stock traded as low as $34.50 last Monday, and then rallied to $37.58, above its 50-day and 200-day SMAs at $35.05 and $33.47. Toll has a hold rating and is 5.1% overvalued with a loss of 1.9% over the last 12 months. Monthly and semiannual value levels are $33.83 and $33.48 with a semiannual pivot at $35.68 and weekly and quarterly risky levels at $38.79 and $44.60.

At the time of publication the author held no positions in any of the stocks mentioned.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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