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Business, Finance, Occupation & Industry

9 Homebuilders That Soared This Week

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By Rick Munarriz, The Motley Fool

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One of the hottest sectors this past week was housing. Things certainly didn’t start out that way. One of the industry’s bellwethers posted disappointing quarterly results on Monday with revenue and earnings growth falling well short of analyst expectations.

But investors hungry for a second opinion got substantially better news when D.R. Horton — the country’s largest homebuilder — posted blowout quarterly results. Revenue soared 49%, and profitability skyrocketed 173% higher.

Most indications point to a speculative market in which potential homebuyers are rushing to lock in home prices before they head even higher. The National Association of Realtors reports that the average home is on the market for just 62 days, an entire month shorter than the average of 91 days a year earlier. The association also reported that home prices rose 11.8% last month, and that’s the largest year-over-year increase since 2005.

This has all of the makings of another housing bubble, but investors didn’t care. They dove into the residential property developers last week, with several companies cranking out double-digit percentage gains.

Company

April 26

Weekly Gain

D.R. Horton

$26.66

21%

PulteGroup

$21.35

19%

Meritage Home

$49.26

19%

M/I Homes

$25.10

18%

Hovnanian Enterprises

$5.67

15%

KB Home

$23.04

13%

M.D.C. Holdings

$38.18

13%

Toll Brothers

$34.69

12%

Lennar

$42.30

11%

Source: Barron’s.

We’re not just talking about a week of gains here. Pulte , KB Home , and Hovnanian more than doubled last year. Hovnanian saw its stock soar 363% in 2012!

It probably isn’t a surprise to see luxury homebuilder Toll Brothers doing so well in this climate. High-end retailers have held up surprisingly well at this stage of the economic turnaround, so it’s not a shock to see the affluent taking advantage of historically low rates to jump on freshly constructed properties. However, Pulte, KB Home, Hovnanian, and D.R. Horton cater to mainstream homebuyers merely looking for a place to call their own after years of renting.

It may not get any easier from here, but investors probably felt that way at the end of last year. Hovnanian has given up some of last year’s gains, but most of the other developers have only padded their already impressive 2012 returns. KB Home is already trading 46% higher in 2013 after more than doubling last year.

The pent-up demand is there for new homes, but investors should be looking out for any signs that the bubble will burst. The last thing they want is to be smack-dab in the middle of a sudsy mess.

Building homes isn’t the only hot revolution
With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the “made in China” era. Well, it may be here. Read all about the biggest industry disruptors since the personal computer in “3 Stocks to Own for the New Industrial Revolution.” Just click here to learn

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Short Sale Stocks: The 5 Companies Bears Love to Hate

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By Rick Aristotle Munarriz

WASHINGTON, DC - MARCH 05: Grover Norquist, President, Americans for Tax Reform, is interviewed by SiriusXM Patriot host Andrew Wilkow at SiriusXM Studio on March 5, 2013 in Washington, DC. (Photo by Leigh Vogel/Getty Images)

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Leigh Vogel, Getty Images

The market hit a series of fresh highs this month, but there’s no shortage of bears betting that share prices will soon fall. A whopping 13.3 billion shares were sold short on the New York Stock Exchange as of the end of last month. Nearly 7.5 billion more shares have been shorted on the tech-heavy Nasdaq.

In a nutshell, selling short means reversing the traditional buy and sell order of a stock transaction. Therefore a short profits from falling prices — but takes a hit when the market heads higher. (For a bit more background, here’s how it works: An investor borrows shares from a broker through an order to sell short. The investor must, at some later point, close out that position by placing a buy order to cover the short. This sort of transaction can be dangerous given the unlimited downside if a stock shoots higher. But it can be lucrative if a shorted stock falls.)

So which stocks are on the most-shorted list?

With 20.8 billion shares sold short between the country’s two leading exchanges, there are plenty of prolific companies with huge bearish positions. Here are five with the largest short positions as of the end of February.

Feb. 28 Dec. 31
Sirius XM Radio (SIRI) 414.0 million 355.4 million
Nokia (NOK) 338.0 million 291.7 million
Frontier Communications (FTR) 227.6 million 212.5 million
Intel (INTC) 216.0 million 215.5 million
Bank of America (BAC) 161.3 million 186.6 million

Source: Barron’s.

Why these companies? Let’s dig a little deeper:

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Motley Fool contributor Rick Munarriz owns shares of Bank of America. The Motley Fool recommends Intel. The Motley Fool owns shares of Bank of America and Intel. Try any of our newsletter services free for 30 days.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

5 Stocks That You Love to Hate

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By Rick Aristotle Munarriz, The Motley Fool

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The bears are growling on Wall Street.

There’s no shortage of shorts out there. Even the steadiest of blue chips attract shorts, drawing speculators who make money on falling stock prices.

I like to check on the market‘s most shorted companies from time to time. It’s been nearly two months since the last time I checked in on the companies with the most shares sold short.

It’s not a perfect art. Naturally, the list is full of stocks with huge market caps. Other common traits here are a large sum of outstanding shares and low share prices.

Let’s dive back in by checking out the companies with the largest number of shares sold short as of the end of February.

Company

Feb. 28

Dec. 31

Sirius XM Radio

414.0 million

355.4 million

Nokia

338.0 million

291.7 million

Frontier Communications

227.6 million

212.5 million

Intel

216.0 million

215.5 million

Bank of America

161.3 million

186.6 million

Source: Barron’s.

Feeding the bears
An interesting point is that the top five names remain unchanged as of mid January. There is usually some movement and rotation, but there was none of that this time. It also bears pointing out that all but Bank of America have seen the number of shares sold short increase during the first two months of the year despite the rallying market.

Sirius XM is at its highest level of shorting activity over the past year. It doesn’t seem to matter that the company is coming off another strong quarter. Robust auto sales will also continue to drive subscriber acquisitions higher, and that’s important for this scalable model with 23.9 million subscribers.

Nokia’s been a volatile stock. The mobile handset pioneer has more than doubled since bottoming out this past summer, but the shares have been sliding since peaking at $4.90 in January. Nokia has had a fair amount of success with its Lumia smartphones, and it’s being rewarded handsomely by Mr. Softy to back the Windows Phone platform.

Frontier Communications is among the regional telcos attracting income investors with their beefy payouts. Frontier’s 10% yield is a magnet for longs — and a challenge for shorts — but the naysayers are gravitating to Frontier as providing phone, Internet, and television services in underserved rural markets falls out of favor. Free cash flow at Frontier declined 13% last year, though that’s still more than enough to cover its distributions given a rate cut last year.

Intel is the chip giant that owns the microprocessor space. Intel is trading closer to its low than its high, as PC sales shrink and Intel battles to matter in the “good enough” mobile computing devices that are replacing traditional desktops and laptops. Intel’s healthy yield of 4.2% also makes it a dangerous short.

Finally, we have Bank of America. The “too big to fail” banking giant finally cleared its stress test earlier this month, celebrating by announcing a massive share buyback. As the economy …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

5 Stocks That Bears Are Avoiding

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By Rick Aristotle, Munarriz, The Motley Fool

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Fear is never universal.

Yesterday I went over five stocks with short interests at 52-week highs. Today I’m going to look at the other end of the spectrum.

There are plenty of stocks where the worrywarts have been running for the hills. The five stocks that I’ll be going over here are either at or near their recent lows when it comes to the number of shares sold short.

Why are fewer investors betting against these companies? Every stock has a unique story to tell. For investors, there are two opposing ways to approach the data.

A bull will see it as validation. The market agrees with the sentiment. A bear can approach this list from the contrarian perspective. Unlike yesterday’s list of prime candidates for a short squeeze, there are apparently fewer skeptics to sway here.

Since the stock exchanges offer up short interest twice a month, giving us 24 snapshots a year, let’s look at the mid-February tallies that were provided late last week and compare them to the bearish wagers placed just six months earlier.

Company 

Feb. 15, 2013

Aug. 15, 2012

Netflix

8.1 million

14.3 million

Facebook

25.4 million

88.0 million

MAKO Surgical

11.4 million

14.1 million

Lennar

32.8 million

33.7 million

SodaStream

7.7 million

8.9 million

Source: Barron’s.

Feeding the bears
Netflix has seen its stock more than triple over the past six months, forcing a lot of bears to scramble and cover their short positions.

Cynics will argue that now is the best time to take a stance against the leading video service, but Netflix continues to grow its global audience and ink the content deals that make it difficult for anyone else to catch up.

Netflix now has more than 33 million streaming customers worldwide. The valuation is stiff, sure, but there doesn’t seem to be any chance to derail the niche leader after last month’s debut of House of Cards positions Netflix as a vastly cheaper yet far more thorough HBO.

Facebook was a widely lampooned IPO last year, and it wasn’t a surprise to see shorts balloon to 88 million three months after going public in May. Investors feared that the leading social networking website operator was going to suffer in the mobile migration. There were also reports of the site’s popularity waning.

Facebook blasted through the concerns. Active monthly users have gone on to top 1 billion, and new mobile monetization efforts are turning the growing engagement of Facebook on smartphones and tablets an opportunity instead of a challenge.

MAKO Surgical shorts are near its 52-week low of 11.3 million.

MAKO is the company behind the RIO surgical robotics platform that is used for orthopedic procedures. Unlike Netflix and Facebook, which have been rallying, MAKO shares are trading near their lows.

MAKO‘s stock took a hit after the company warned of a slowdown in orders for new RIO systems a few months ago. Last week’s updated outlook is cautious. MAKO sees itself selling less …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

5 of Last Week's Biggest Losers

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By Rick Aristotle Munarriz, The Motley Fool

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There’s never a shortage of losers in the stock market. Let’s take a closer look at five of this past week’s biggest sinkers.

Company

March 1

Weekly Loss

ITT Educational Services

$13.56

27%

Molycorp

$5.81

12%

GT Advanced Technologies

$2.78

12%

Halcon Resources

$6.65

11%

OmniVision Technologies

$13.61

11%

Source: Barron’s.

ITT Educational Services flunked out after revealing that the SEC was investigating the accounting behind the post-secondary educator’s private loans program.

Molycorp fell after delaying its fourth-quarter report to March 15. The rare-earth minerals producer still isn’t sure how big a goodwill hit it will be taking related to last year’s purchase of Neo Material Technologies.

Facing challenging conditions in the solar and LED markets, GT Advanced Technologies posted disappointing quarterly results. GT served up a loss as revenue declined sequentially and year over year. The company booked just $6.5 million in new orders during the quarter.

Global Hunter Securities downgraded Halcon Resources this week, even after the Bakken oil producer delivered strong growth in its latest quarter.

Finally we have OmniVision posting a double-digit percentage decline after offering a weak near-term outlook. OmniVision is the top dog in image sensors at a time when high-quality cameras are a priority in smartphones and tablets. The problem for OmniVision is that this has become a very competitive market.

Sure, OmniVision far exceeded Wall Street expectations on the top and bottom line during the holiday quarter, but its near-term outlook isn’t as rosy. OmniVision’s guidance for earning $0.14 to $0.29 a share on no more than $330 million in revenue is well short of the $0.32 profit on $371.5 million in revenue that analysts were forecasting.

Ready for a bounce
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The article 5 of Last Week’s Biggest Losers originally appeared on Fool.com.

Longtime Fool contributor Rick Aristotle Munarriz and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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