KBH trade ideas
Pull Back Fishing Falling Wedge GartleyLooks like a Bullish Gartley pattern as well.
The AB retracement leg should be .618 of XA. The CD leg should be a .786 retracement of XA, or close for a bullish Gartley pattern.
Possible stop under first or last bottom, or under D. The first bottom (blue star) is not a deep bottom and appears to be part of a smaller pull back.
Falling wedges can be bullish during a pull back and slope down which is against the larger, long term trend. The 2 trendlines converge at the apex. A FW can signal that selling pressure may be easing off.
No recommendation.
Focus and simplicity. Simplicity can be harder than complex.
KB Home forecast hike could lead to breakoutFundamentals
My trading algorithm doubled down on KB Home today due to a substantial increase in Wall Street consensus earnings forecasts. I estimate that forward P/E on the stock is about 5, and forward P/S is about 0.6. (But note that my forecasts are more optimistic than the Street consensus, which currently puts forward P/E at 6.7.) I estimate that KBH will yield about 2.3% in dividends over the next 12 months. Most impressive of all is KBH's 5-year growth rate. 8% earnings growth, 3% sales growth, and 12% dividend growth. KBH has about 21% upside to its median earnings-date multiple of the last 5 years, making it one of the most undervalued stocks I follow (second only to NRG). KBH has received large earnings upgrades even as the stock price fell. The earnings outlook gets a score of 6/6 from me. Recent movement in the bond market seems to favor lower future mortgage rates, which would be good for housing demand.
The main downside here from a fundamental point of view is that KBH has substantial debt and weak free cash flow, with P/FCF near 18. S&P Global gives KBH a 43.5/100 fundamentals score due to low margin and somewhat weak financial health.
Neutral sentiment
Homebuilder sentiment is somewhat weak because of data showing that a growing number of home buyers think it's a bad time to buy a home. That's a concern, but this data isn't a strong leading indicator of prices. Even when they think it's a bad time to buy, consumers seemingly buy anyway. Presently buyers also have some competition from hedge funds, who've been snapping up single-family houses as investment properties.
The analyst summary score for KBH stands at 4.4/10, unchanged over the last 30 days. The put/call ratio is 1.1, slightly bearish. However, KBH is currently trading 35% below the average analyst price target, making it the second most undervalued stock I follow by this measure (after fellow homebuilder MDC Holdings). I think sentiment will flip as soon as KBH gets some "constructive" movement in price. (See what I did there?)
Technicals
KBH is below its 200-day EMA, and the 20-day and 50-day EMAs are pointed downward. It's also got a down-trending resistance line. Overall, this would seem to favor a continued selloff.
However, KBH has some support in this area, and there was a big spike in volume a couple days ago when KBH reported earnings. (KBH beat analyst earnings estimates but missed on sales. Guidance was optimistic.) I find that volume tends to spike at inflection points, either a short-term top or a short-term bottom. So I'm thinking that KBH might bottom here short-term.
Strategy
I've gone ahead and bought a few shares in anticipation of a bullish breakout, and I've set an alert to pick up some more shares after the price moves up through the red resistance line.
If we do get a short-term bottom here, I'm looking for about $43.75 from the initial leg up. Whether we keep going up from there will depend on whether analysts upgrade the stock. I think it's pretty absurd for a company with strong growth to be trading at such low price multiple. So based on valuation alone, I'd expect analysts to get more bullish here. But any increase in home inventories and mortgage rates or decrease in median home selling price might weigh on sentiment, so be aware of that risk. KBH's fate will definitely be influenced by larger market conditions.
If sentiment stays strong, I'll diamond-hand my way up to a second price target at $47, and a third target at $49.50.
Earnings Today Expected more growth at pre-market. Lets see what we get after the report. Will be very interesting.
MACD looks to be closing red. Opened up my position today heading into earnings. KBH looks to benefit with the housing situation. Expecting some good news tomorrow.
KB HOME AnnouncementHello traders, KB HOME is in a fake bearish configuration with a large selling volume especially in the last quarter of an hour of the session. On the TIMEFRAME 1 Min we see a rejection of buyers on a purchase volume, it is going to its next low point. Then start again in its rise, big potential to break the zone of equilibrium, to reach another zone. And go to its next higher, after seeing if the buyers are still in the game to go to the point above.
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OPENING: KBH JULY 17TH 28/40 SHORT STRANGLE... for a 1.17 credit.
Notes: Earnings in 1 with rank/implied at 57/73 and the at the money short straddle paying nearly 15% of the share price. Looking to take profit at 50% max or otherwise manage on side approaching worthless.
THE WEEK AHEAD: KBH, NKE EARNINGS; IWM, IYREARNINGS:
KBH (64/77/15.5%) announces on Wednesday after the close. Pictured here is a Plain Jane, directionally neutral short strangle camped out at the 18 delta strikes paying 1.34 as of Friday close. Look to put on a play on Wednesday before the close, adjusting strikes as necessary to accommodate movement of the underlying between here and then.
NKW (40/45/9.1%) also announces this week (Thursday after the close), but has less than ideal metrics. Naturally, those could change during the week, so it's worth keeping an eye on.
EXCHANGE-TRADED FUNDS SCREENED FOR 30-DAY >35%:
SLV (51/39)
EWW (47/43)
TQQQ (45/92)
GDXJ (44/61)
XLE (42/55)
EWZ (42/37)
GDX (38/47)
SMH (35/40)
XOP (31/68)
USO (12/60)
I generally look for rank >50, 30-day >35% with these; only SLV meets this criteria, but the August 21st 15/19 short strangle paying .61 doesn't exactly get my motor running.
BROAD MARKET:
IWM (61/46)
SPY (38/32)
QQQ (35/31)
EFA (34/28)
Small caps are where the volatility is at. The August 21st 115/161 delta-neutral 16 delta short strangle is paying 4.34 to put on.
DIVVY-PAYING EXCHANGE-TRADED FUNDS ORDERED BY RANK:
IYR (52/40)
XLU (46/32)
HYG (40/22)
EWZ (40/57)
SPY (38/32)
EWA (38/38)
EFA (34/28)
TLT (20/17)
EMB (19/17)
Will look to ladder out in IYR in August, September for the IRA if the implied hangs in there. The 16 delta August 21st 67 short put is paying 1.39; the September 65, 1.61.
$KB Home break up or down?Earnings Highlights Source Seeking Alpha
KB Home (NYSE:KBH) drops 2.9% in after-hours trading after the homebuilder's fiscal Q4 revenue of $1.56B trailed the consensus estimate of $1.60B.
Average selling price of $392.5K for the quarter ended Nov. 30, 2019 slipped from $395.2K in the year-ago quarter.
Q4 EPS of $1.31 exceeded the average analyst estimate of $1.30 and increased from 96 cents in the year ago quarter.
Q4 net orders rose 38% to 2,777, with net order value increasing 43% to $1.06B.
Ending backlog rose 24% to 5,078 home, with ending backlog value up 26% to $1.81B.
KBH Possible Bull PenantSymmetrical Triangle at the top of an up Trend. Breakout on above average volume. Higher Time Frame Trending up.
entry at the Gold Shadow line. Stop loss at the red line. Top of the Red Vertical Line is the my target area.
$KBH:NYSE - KB HOMES - Homebuilder up 70% YTDHomebuilders in the US have been having a great run year-to-date and with low interest rates likely to continue for a while then this could be a good stock to watch.
KB HOME is a homebuilding company. The Company is engaged in selling and building a range of new homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family residential homes. It operates through five segments, which consist of four homebuilding segments and one financial services segment. Its homebuilding segments include West Coast, Southwest, Central and Southeast. The homebuilding segments are engaged in the acquisition and development of land primarily for residential purposes. The financial services segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to its homebuyers in the same markets as its homebuilding segments, and provides title services in the majority of markets located within its Central and Southeast homebuilding segments. It offers homes in development communities, at urban in-fill locations and as part of mixed-use projects.
KB Home aims for ATHKB Home engages in selling and building a variety of new homes. It builds various types of homes, including attached and detached single-family homes, townhomes and condominiums. It operates through the following segments: West Coast, Southwest, Central and Southeast. It offer homes in development communities, at urban in-fill locations and as part of mixed-use projects. The company was founded in 1957 and is headquartered in Los Angeles, CA.
Lennar Corp has set the scene for KB HOME earnings call.As earnings approach for KB Home tomorrow, sentiment and optimism is very low as a result of the earnings call from Lennar this mornings. Despite LEN beating on earnings things turned nasty on the earnings call and the stock has now reversed by 10% since the pre market.
LEN pointed out some major headwinds which freaked out investors, included were skilled labour shortage and costs, raw material costs as a result of the trade war and the fact that consumers are moving towards lower cost homes thus cutting the margins. Indecision regarding rate levels has also resulted in consumers waiting to see if better value credit will be available later in the year, thus housing starts have fallen. Putting all those factors together it is difficult to see how KBH could do anything but fall further in price.
$KBH KB HOMES has easy 20% upside on rate easing. Quite simply we all need somewhere to live and the easing of rte hikes by the FED has made that it a a little easier to own your own home. Indeed a rate reduction is more likely than a hike in 2019 which is a catalysts to the housing market.
