Mike Cintolo
Cabot Top Ten Trader
Geoffrey Seiler
Bullmarket.com
Sy Harding
Street Smart Report
Nicholas Vardy
Bull Market Alert

Homebuilding buys


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by Bernie Schaeffer, editor Schaeffer's Investment Research

Our stock picks are based on a strategy known as "expectational analysis" which combines fundamental, technical and contrarian-based sentiment metrics. Based on this approach, I initiated a long positions in two homebuilders.

Homebuilders have been strong all year, and economic data and homebuilder sentiment is slowly improving.

PulteGroup (PHM) has posted a year-to-date gain of 185 percent and a 52-week return of 222 percent. Short interest, as a percentage of the stock's float, is over 7 percent.


Analysts remain hesitant to upgrade the equity as 7 of 14 still maintain a hold or worse. Any future upgrades could bode well for the shares.

Lennar (LEN) is another homebuilder that has been a big out-performer all year. The shares are up nearly 100 percent this year, and are up over 114 percent in the past 52 weeks.

Short interest remains high and is currently at 23 percent of its float. This could lead to a short-covering rally.

Additionally, bearish option activity is prevalent as the Schaeffer's put/call open interest ratio stands at 1.25. An unwinding of these bearish bets could act as a tailwind toward LEN.

Learn more about this financial newsletter at Bernie Schaeffer, editor Schaeffer's Investment Research.

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