D R Horton Inc. (DHI-N)

They reported weak numbers last Thursday, in a big top and bottom line miss. Revenue shrunk 15% with EPS -20% YOY. Shocking. They slashed full-year guidance. Are effected by a worried, cautious consumer in this economy. That said, shares actually gained last Thursday, because of a few positive numbers, like a low cancellation rate. They will buy back $4 billion of shares. Bottom line: It's dangerous to buy anything connected to housing.

She added more, because it got so cheap at 9x forward PE. She expects housing to rebound. In fact, Home Depot saw its first positive comp in 8 quarters. 

It hit a new low. 69% of their homes cost under $400,000, so they appeal to first-time homebuyers. This is wait and see.

Is -7% this year. It's all about 30-year mortgages above 7%. 69% of their delivered homes this year were below $400,000. But it's a tough hill to climb with these high rates.

The homebuilders were in a tough spot entering this year, because of higher interest rates. Also, 13% of the construction industry consists of undocumented workers. If Trump cracks down on such workers, these will drive up labour costs and home prices.

It rallied today, perhaps in reaction to Harris promising $25,000 to anyone buying a house if she wins. Lennar also rallied.

Is building a base now after a monster move higher, breaking above $200. Their uptrend is cooling down, but their Chaikin Moneyflow remains strong. After going sideways, Lang predicts this will hit $250-275 in 2025.

A decade-long theme, not short term is in housing, if interest rates fall from 6.7% to 5.5% (likely in 2025). She likes DR Horton, but it's up 87% the past year, though is cheap now and gross margins are good.

Is up 25% this year. Likes it for lower interest rates, and their homes are affordable (70% of their homes cost under $400,000) during a housing shortage.

They reported last week: orders were up a lousy 1%, not 9% as expected, but gross margins expanded 50 basis points to beat expectations and added more buybacks. Trades at 12x PE.

Sometimes momentum works. Balance sheet is strong, home inventories are weak, and fundamentals are strong overall. Add to this cheaper capital/lower rates. The outlook looks good.

He's long in the homebuilders which are declining now. September earnings were okay, but shares were weak. These stocks peaked last spring, and he can't see a return to that as long as interest rates remain high.

The homebuilders had seen fundamental strength peak in the spring selling season. Doesn't mean there will be a sharp fall for the homebuilders, but are moderating gains (at least in fundamentals, not share price). They still benefit from holding a tight inventory of homes in the US, which will benefit them long term. They peaked earlier, true. He execpts a modest share price recovery.

He bought this for its strong fundamentals, but momentum is clearly waning. He will review his holding in April.