Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Home builders strong in early trading, led by MTH which reported an earnings beat and strong orders. Those lower mortgage rates are kick starting the group.MTH is up 15%, unfortunately, I don't have that one.
Meritage Homes reports second quarter 2019 results including a 22% increase in orders, reflecting healthy demand for entry-level homes, along with a 5% increase in closings and diluted EPS of $1.31
GlobeNewswire•July 24, 2019
MANAGEMENT COMMENTS
“Home buying activity was strong and steady throughout the second quarter of 2019, led by affordable entry-level and move-up homes," said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. “Our second quarter orders increased 22% year-over-year to a total of 2,735, representing a 13-year record high for quarterly order volume, which was mainly driven by a 19% increase in absorptions pace on top of a small increase in average community count. We believe the demand we’ve seen throughout the extended spring selling season reflects sustained positive macroeconomic factors for the housing industry.
MHO Needless to say, I am pleased as it is one of my largest holdings in the sector. Disappointed that backlog is down yoy but I also note that orders are up 6% yoy. Stock is still slightly below BV of $33.
CCS is another favorite although my enthusiasm is tempered by the fact that the co-CEO sold a large chunk of shares in late June. He sold about 20% of his holdings.Will know in a week as earnings come out then although I think some of the recent weakness in the stock is because of that.
Home builders were mostly down today because the existing home sales report was weaker than expected. I don't understand the logic of traders here. The lower than expected sales was due to lack of inventory and is backed by higher prices of homes y0y (prices up about 4.5% yoy). A lack of existing hom inventory pushes buyers to new construction.
I think traders are looking at the glass as half empty rather than half full. PHM announced a beat with positive comments and was up AH but quickly fell after the report came out. Ended up down 8%.
Oh well, with low mortgage rates and a good economy, I expect traders will soon be back.
MU Goldman raises this to a buy on rising chip prices. Dram prices have been on fire since the fourth of July, basically retracing all the ground they lost in the previous 3 months. Unfortunately, I have missed the huge rally as I expected a bottoming process not a sharp V reversal.
NFLX Wow, down 13% AH. Didn't they recently raise rates for subscribers? Maybe they miscalculated the effect of that on subs. Also, I wonder how much of that miss was in foreign vs US subscriptions.
PACW was a $50+ stock a year ago and I sure like their big dividend. Joined you on this one, thanks for pointing it out.
CPE wants to buy a company even more loaded with debt than they are??
Here's a comparison based on 3/19 quarter:
Company Cash on hand / Current liabilities / LT debt
CPE 10M 245M 1,331M
CRZO 2.2M 449M 2,267M
I don't understand why CPE would want to do this and apparently other CPE investors feel the same as it is down 15% today. Sure glad I kept it a small position. Even with that, CRZO investors are saying that mgmt sold them out too cheap. Hopefully, stockholders of both will say "NO DEAL".
If the Fed does decide to cut rates, I'm pretty sure it will be the first time in history that they lower rates with stock averages breaking new high records.
MU Don't own this one anymore so I have missed the recent rally. I just wanted to point out that Dram chip prices have made a sharp reversal to the upside. The DXI index was up over 2% today.
https://www.dramexchange.com/
PVAC Yet the stock dropped 7% the day that the departure of the 52 yo CFO was announced. Something doesn't smell right with this one. I just can't figure out what it is.
MDC Many homebuilders are green today likely helped by some very strong preliminary results from MDC, including a very strong 32% increse in orders yoy. Those lower interest rates are really helping the group.
Shares of M.D.C. Holdings Inc. were indicated up nearly 3% in premarket trading Monday, after the home builder reported some preliminary second-quarter results that were above expectations. The company said net new home orders increased 32% from a year ago to 2,273, well above the FactSet consensus of 1,791, while deliveries inched up 0.1% to 1,514 to beat expectations of a 0.7% decline to 1,501. The average sales price of new orders was about $484,000. Homes in backlog increased 7% to 4,293, the most since 2006, while the FactSet consensus was for a 4.4% decline to 3,824. Gross margins are expected to exceed 19%, compared with the FactSet consensus for homebuilder gross margin of 18.8%. Full second-quarter results will be released on July 31
NWHM Nice run-up in this beaten down home builder the last couple of days. I noticed this is right after they announced the date of their earnings release will be a few days earlier than normal (7/30). Hopefully, they are anxious to share some good news this time.
Happy 4th everyone.
PVAC Down 7% today and getting close to 5 week lows again. Oil is weak today but it is still well up in the last month or so. New announcement that the CFO leaving the company may be a factor although it also said there are no differences causing his exit. Still, the guy is only 52, so there may be investors think there may be more to that story.
MU great rally the last couple of days. I'm out so missed it but I question whether it will hold. Dram prices keep dropping everyday. Today, the DXI was down another 1.4%.
KBH ,another home builder, reported a beat and gave a strong outlook. Stock is ip 6.7% and this time the whole sector looks to be following it up. Also helps that 30 year mortgage rates hit a 2 1/2 year low of 3.73%.
LEN looks like a myopic over-reaction by investors to current quarter guidance. Company expects margins to rise in the second half. Sales are strong enough that they are reducing incentives and discounts. Savings from lower lumber prices dwarfs any higher costs from tariffs. I have a buy order in now at about $48.
LEN goes from flying on an earnings beat to tanking (down 6.5%) and taking the sector down with it. Not sure why the big turnaround, could be something in the CC but the transcript is not yet available. I'm tempted to open a position in this one here.
Sander's plan is calling for .5% tax on stock trades. That's 1% roundtrip, win or lose. That should pretty much put a halt to day trading and reduce all trading and liquidity. The democrats seem intent on becoming the party of freebies, only problem is that someone has to pay for them.
Market seems to be ignoring that news about the US drone being shot down by Iran over international waters. US ships are being dispatched to check out the debris field.That place is a powder keg.
I guess I shouldn't say that the market is ignoring it. Oil is up about 4% and oil stocks are having a strong day too. PVAC is up nearly 5%.
SP500 is poised to open at a new record high this morning and the Dow will be very close to one. Interest rates keep falling too with the 10 year down to 2.00%. We went from doom and gloom in May to a goldilocks market in June. Crazy but I'll take it.
NRZ Recovery now into it's 3rd day. Now at 15.55 +.18.
Bullish article on NRZ came out on SA yesterday too:
https://seekingalpha.com/article/4269729-new-residential-investment-aggressively-buying-drop
PVAC Crashing to new lows in the 28 area. Hard to believe it hit 96 last summer. Earning estimates still at $9-10/ share. Seems there has to be some bad news out there that us mere mortals don't know about.
NWHM I wondered why this one suddenly sprung to life. Someone should buy these guys out. Thanks. Too bad the rest of the group were down but, there is always tomorrow.
NRZ is definitely a drag on my portfolios today. One would think that the high yield stuff would be doing well with interest rates dropping, but mostly it has not. With NRZ, investors are likely concerned that refinancing of mortgages they hold will hurt them, although mgmt says they are protected. I hope mgmt is right.
Washington Post is reporting that Mexico has agreed to send 6000 troops to the Guatemala border to stem the flow of people from there. If confirmed, that should help the market tomorrow too.
https://www.washingtonpost.com/business/economy/trump-reports-headway-in-us-mexico-talks-on-migrants-but-renews-tariff-threat/2019/06/06/bb0801e4-8860-11e9-98c1-e945ae5db8fb_story.html?utm_term=.89b6926a5c29
Home builders Amazing to me how fast and far the 10 year note rate has dropped in a few short months even in the face of strong economic news and higher stock prices (well until May anyway). 10 year note is at 2.11% today.
One beneficiary of lower interest rates are the homebuilders plus lumber prices have dropped as well which should also help earnings. A number of them are selling at or below book value and have single digit PEs including MHO, CCS, TMHC, and TOL. If this low rate environment continues, I expect revs and earnings estimates to move upwards.
SPRT Don't own this one but does anyone else find it ironic that a company that offers call center services, regularly declines to offer conference calls after earnings for analysts and investors?
I'm not surprised that futures are pointing toward a big down day today as the market hates surprises. But let me play devil's advocate here:
Trump is extremely frustrated about Congress not doing anything about the border crisis, even though many on both sides now agree that has become a crisis.
Also, it looked like Congress would not be passing the USMCA agreement either. I'm pretty sure that agreement removes tariffs between the US, Mex, and Can. Maybe the threat of tariffs will get Congress to vote on and pass USMCA to head those tariffs off.
Also encouraging that the Mexico president said in a news conf this morning that Mexico will not go tit for tat on this and he also believes a resolution can be worked out to the benefit of both countries through dialogue.
I'll predict that those tariffs will not kick in on June 10 and maybe congress will actually get to work on legislation. In that case, we should recover our losses sooner rather than later.
UBER So they are losing $1 dollar for every $3 in revs they bring in. What a surefire recipe for success. And nearly $9 billion in negative stockholder equity too.
Good thing they did that IPO or they might be bankrupt about now.
ELTK The price action here blows me away. Their sales were actually lower than they were a year ago. Looked at the transcript of their very short CC and management said they figured out they were losing money on some products so they stopped shipping them. The only question in the CC was asking about forward guidance but they sad that they don't do that. They also commented about some difficult market conditions and said quote:
We will continue to closely monitor Eltek expenses, with the aim of returning and maintain sustained profitability, but we cannot assure that this will be successful.
That does not give me any of the warm fuzzy feelings that the recent price action indicates. I would short the hell out of this one if I could.
NRZ I think the recent weakness here is due to drops in interest rates and concerns of early repayments of MSRs and loans. Also, a couple of big players in the mortgage REIT industry recently reduced their dividends, NLY and AGNC.
NRZ mgmt says they will continue to do well in either a rising or falling rate environment. I'm still holding my shares, they are now below book value and have generally traded above book.
There was an article in SA earlier this month that goes into this. I'm not sure if it is still available for non-subscribers but here is the authors summary:
Summary
New Residential Investment Corp. reported solid Q1-2019 results last week.
The mortgage REIT outearned its dividend with core earnings once again.
Mortgage REITs with top-of-class dividend coverage stats, neutral interest rate exposure and growing book values are on my shopping list in case the current trade war-related sell-off picks up steam.
Shares are attractively valued, but could get even cheaper.
I am going to double down on NRZ in case the current market sell-off accelerates.
Oh, oh there goes our ethanol production.
That could also be a good thing, IMO.
PVAC sure does look cheap. I just wish some insiders would step up to the plate and buy some of those cheap shares.
Congrats Wade on your big comeback, but that much volatility in my portfolio would give me ulcers. Futures are now pointing to a weak open. The China trade worry button got pushed again.
Wow, Dow up over 200 points now. Market seems to be shrugging off looming tariff war with China and focusing on some good economic news. Housing starts are up more than expected (home builders are also up today). Market also thinks a Fed rate drop this year is likely this year.
KEM Looks like we were both early trading sellers. I lightened up too between 18.25 and 18.48 (so far, I'm regretting it). As Hweb pointed out, a good chunk of the earnings were due to a tax credit, but counting that tax credit earnings came in at $1.60 or so. Without the credit, it was still a beat the way I see it.
Looks like they are guiding for a little lower revs next Q than analysts estimated which is why I lightened up. Still like and hope to buy back cheaper during heightened china trade concerns as I still think it is probably undervalued here.
KEM reported strong results and a nice beat in both earnings and revs. Stock is trading up about 10% premarket.
Kemet (NYSE:KEM) reported quarterly earnings of $1.05 per share which beat the analyst consensus estimate of $0.89 by 17.98 percent. This is a 133.33 percent increase over earnings of $0.45 per share from the same period last year. The company reported quarterly sales of $355.794 million which beat the analyst consensus estimate of $342.96 million by 3.74 percent. This is a 11.87 percent increase over sales of $318.047 million the same period last year.
I guess the market is used to tariffs. It's been dealing with them for nearly a year now. I'm also surprised the market is up today in the face of those weaker than expected consumer sales numbers. 10 year Bond yields are down too to 52 week lows, I think we are close to inverting again.
Anyway, I'll take it when the market turns up for whatever reason.
Wade, I don't know about Vanguard, but TDAmeritrade works fine for me. Merrill Edge is actually my favorite, as they charge me zero commission but I think you would have problems with them as they wouldn't like your putting so much of your portfolio into something like SOXS.
Is your present broker hassling you over your huge SOXS position?
PVAC Nice pep talk, just picked up some more PVAC and KEM too.
Now we know China's response to increased tariffs. Now the question is what will Trump do? That will likely set the tone for the market tomorrow.