D.H. Horton supported by strong earnings
The homebuilder's shares are building extremely bullish momentum.
By Leo Fasciocco, Ticker Tape Digest
Home building stocks have been coming in with better than expected profits and many have been pushing higher. D.R. Horton (DHI) recently broke out from a 13-week flat base, which carried the stock to a six-year high. The push higher was triggered by favorable quarterly earnings.
With annual revenue of $4.7 billion, the company builds high-quality, single-family homes designed principally for the entry-level and move-up markets. It also provides mortgage financing and title services.
DHI's long-term chart shows the typical cyclical pattern of the housing stocks. The stock soared from $3 to a peak of $42 in 2005. The stock then made the round trip back to $3 in 2008 due to the bear market.
However, since then DHI's stock has been on the move higher. The stock recently broke out from a 13-week flat base, which carried the stock to a six-year high. Over the past 12-months the stock has appreciated 62% versus 18% for the S&P 500 ($INX) index.
This fiscal year ending in September, analysts are forecasting DHI will show a 36% gain in net to 31 cents a share from 23 cents a year ago. We see good chances for that forecast to be raised.
Going out to fiscal 2014, earnings are projected to climb 31% to $1.02 a share from the anticipated 31 cents for fiscal 2013.
Institutional sponsorship is excellent. The largest fund holder is Fidelity Contrafund with a 5.6% stake. The 4-star rated fund was a recent buyer of 682,966 shares. Also, the 4-star rated T. Rowe price Inst. Large Cap Growth Fund was a recent purchaser of 707,600 shares.
The stock's momentum indicator is extremely bullish. The accumulation -- distribution line has turned up and compliments the price action. We are targeting DHI for a move to $32 off this breakout.
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