Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Oct 13, 2020
Group of 5 Homebuilders to Report Earnings Next Week

Group of 5 Homebuilders to Report Earnings Next Week

There has been an incredible shift in consumer preferences, when it comes to living arrangements, since the health crisis hit the United States. It seems that people are looking to buy single-family homes in the suburbs en masse at this point in time. The COVID-19 pandemic is creating demand as consumers are perhaps reevaluating whether they want to live in a building with hundreds of other people.

We are also seeing companies shift their policies to allow more people to work remotely. Earlier this week Microsoft announced that it was permanently changing its policy and that many workers would be allowed to work remotely.

The shift in housing preferences has caused the homebuilding stocks to rally sharply in the last six months or so. The SPDR S&P Homebuilders ETF (XHB) has more than doubled off of its March low. The huge rally has put the fund in overbought territory and many of the stocks held by the fund are also overbought at this time.

In the week of October 19-23, five different homebuilders are expected to report earnings. Rather than using just the holdings in the SPDR Homebuiders ETF, I looked to Tickeron’s Homebuilding Industry Screener. By using this feature I was able to quickly review the fundamental and technical indicators for all five of these stocks. The companies reporting next week are Meritage Homes (MTH), M/I Homes (MHO, Patrick Industries (PATK), PulteGroup (PHM), and TRI Pointe Group (TPH).

Looking at the scorecard ratings, three of the five are rated as a “strong buy” and the other two have “buy” ratings. Four of the five have more bullish technical signals than bearish ones and three of the five have more positive than negative fundamental signals.

Pulte really stands out above the rest with four positive fundamental indicators and four bullish signals from the technical indicators. The stock doesn’t have any negative marks on either side. TRI Pointe and M/I Homes are close behind with only one negative fundamental indicator and one bearish signal from the technical indicators.

As for specific indicators where there is consensus among the group, all five have positive Outlook Ratings on the fundamental side. As for the technical indicators, there are two where all five have bullish signals—the Momentum Indicator and the MACD indicators.

The AI Trend Predictions, four of the five stocks have bullish predictions for the next week and for the next month. Patrick Industries is the only one with a bearish trend predicted and that is for the next week. The results for the next month are inconclusive.

One other area of analysis that I find useful, especially when it comes to earnings announcements, is the sentiment being displayed toward a stock before the report. If the sentiment is overly bullish, it is almost impossible for the company to issue earnings that meet expectations. Conversely, if the sentiment is extremely bearish, it is an indication that expectations are low and any positive news will be met with buying pressure. This is a contrarian line of thinking.

For these five stocks the sentiment doesn’t seem to be overly bullish in any capacity. In this case I listed the overall analysts’ ratings for each stock and I listed the short interest ratio (SIR) as well. In the case of the analyst ratings, I have grouped them as buy/hold/sell. There aren’t any sell ratings among the stocks.

The only stock that has a vast majority of buy ratings is Patrick Industries, but there are only six analysts covering the stock. I was very surprised by Pulte having more hold ratings than buy ratings. Over the years I have found the average buy percentage falls in the 65% to 75% range. This means Pulte is well below average in this area. Given the high number of hold ratings and the reluctance for analysts to issue sell ratings, having a great number of hold ratings gives us a greater chance of upgrades than downgrades.

As for the short interest ratios, the average ratio is in the 3.0 range. The reason a high short interest ratio can serve as a bullish indication is more mechanical than the analysts’ ratings. If a stock is rallying and a short seller is forced to cover their position, it adds buying pressure to a stock that is already rallying. In this case we see that Patrick Industries and TRI Pointe Group both have short interest ratios that are much higher than the average stock. If either of these companies beats its EPS estimate by a wide margin, the stock could rally sharply as short sellers try to cover.

The overall outlook for the group is pretty strong based on the fundamentals, the technical indicators, and the sentiment indicators. I would consider Pulte and TRI Pointe as the strongest two based on the overall analysis.

Related Tickers: XHB
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 07, 2021
4 Tricks Hedge Funds Use to Get Ahead

4 Tricks Hedge Funds Use to Get Ahead

If the stock market were Major League Baseball, hedge funds and institutional investors would be the pros on championship teams while everyday self-directed investors (SDIs) are the benchwarmers in the minors.It’s how they get ahead, and it’s why 90% of SDIs lose money trying to play (invest and trade) in the major leagues. The 4 tricks we discuss below are rooted in one common theme: they all use Artificial Intelligence and algorithms to generate data and ideas.
John Jacques's Avatar
John Jacques
published in Blogs
Mar 22, 2018
A.I. Stock Market Predictions: Head & Shoulders

A.I. Stock Market Predictions: Head & Shoulders

Statistics for the Head-and-Shoulders Bottom Pattern The days where only hedge funds used algorithms to trade stocks are officially over. Now retail investors can use Artificial Intelligence (A.I.  Here’s an example of the algorithm in action: Late last year, Tickeron’s A.I.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Jul 10, 2020
3 Stocks to Buy if Coronavirus Second Wave Hits

3 Stocks to Buy if Coronavirus Second Wave Hits

By analyzing market trends from the first wave, you can predict behavior for the second. Technology stocks have performed at historic levels this year, but the market is severely overbought.To compensate for that, look at performance during Q1 and Q2, the height of global Covid shutdowns.
Edward Flores's Avatar
Edward Flores
published in Blogs
Feb 06, 2021
How to Become the Millionaire Next Door

How to Become the Millionaire Next Door

The Golden Gate Bridge is always a fixture of these walks too, one of man's most beautiful creations.  As we were walking, at one point she turned to me and said, "Man, I'll never have a million dollars."" My girlfriend is 27 years old and works as a graphic designer, making about $75,000 a year.
Alla Petriaieva's Avatar
Alla Petriaieva
published in Blogs
Feb 23, 2021
Is Ethereum’s Bomb about to Explode?

Is Ethereum’s Bomb about to Explode?

Ethereum’s software is set for an update in October.Until it is finished, participants in the Ethereum blockchain must determine how to delay the difficulty bomb – code that necessitates a steadily increasing amount of computer power to mine blocks and unlock rewards – that is already in place.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Aug 07, 2018
When Is the Next Recession Coming?

When Is the Next Recession Coming?

However, we also know that economists predicted 22 recessions out of 11 that took place since 1945. Are there real recession signs we should watch for?Indeed, the answer is yes, and here are a few very important ones: The first one is almost obvious and known to everyone – it is the Fed.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 22, 2020
Central banks have been buying $2.4 billion in assets every hour for the past two months

Central banks have been buying $2.4 billion in assets every hour for the past two months

Some $17.8 billion has been poured into  bond markets over the past week, the biggest move in more than three months.Around $3.5 billion has been invested into gold, the second largest on record. 
Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Feb 07, 2021
Mid-January Short Interest Report Shows 8 Stocks with Good Fundamentals and High Short Interest
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 10, 2021
How to Start Trading Penny Stocks

How to Start Trading Penny Stocks

Penny stocks have long been marginalized within the professional investment community, oftentimes being painted with a broad brush of simply being “too risky.” Leonardo DiCaprio’s depiction of the penny stock peddling conman, Jordan Belfort, in the Wolf of Wall Street certainly didn’t help.Here are four reasons to start trading them now. Reason #1: Let’s State the Obvious -- Penny Stocks are Cheap A single share of Apple Inc. costs over $350.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 08, 2020
US unemployment rate jumps to 14.7%, the highest in series history

US unemployment rate jumps to 14.7%, the highest in series history

The U.S. economy’s employment fell by -20.5 million in April. The coronavirus crisis led to unemployment rate soaring to 14.7% in the U.S, the highest rate in the Bureau of Labor Statistics-tracked series history that goes back to 1948. However, the figures were better compared to several economists'/analysts' forecasts of 22 million job losses and 16% unemployment rate.  Another unemployment measure that includes those who have stopped looking for work as well as those holding part-time jobs for economic reasons also touched an all-time high of 22.8%.