Strong On High Volume: Lennar (LEN)

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.

Trade-Ideas LLC identified Lennar ( LEN) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Lennar as such a stock due to the following factors:

  • LEN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $97.4 million.
  • LEN has traded 854,778 shares today.
  • LEN is trading at 2.92 times the normal volume for the stock at this time of day.
  • LEN is trading at a new high 3.00% 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 LEN:

Lennar Corporation, together with its subsidiaries, engages in the homebuilding activities in the United States. The stock currently has a dividend yield of 0.3%. LEN has a PE ratio of 16. Currently there are 6 analysts that rate Lennar a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Lennar has been 2.8 million shares per day over the past 30 days. Lennar has a market cap of $8.2 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.42 and a short float of 17.5% with 14.86 days to cover. Shares are up 4.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Lennar as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, reasonable valuation levels and compelling growth in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.6%. Since the same quarter one year prior, revenues rose by 21.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • LENNAR CORP has improved earnings per share by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, LENNAR CORP increased its bottom line by earning $2.81 versus $2.14 in the prior year. This year, the market expects an improvement in earnings ($3.17 versus $2.81).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Household Durables industry and the overall market, LENNAR CORP's return on equity is below that of both the industry average and the S&P 500.

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