3 Homebuilder Stocks for Active Investors
Scheduled to announce quarterly earnings on Tuesday, shares of Lennar Corporation (NYSE: LEN)have begun to climb ahead of the company’s report, gaining more than 2% in Monday’s session. The stock had pulled back for five out of six trading days heading into the first trading day of the week, and much of Monday’s gain likely can be attributed to buyers taking advantage of short-term oversold conditions.
The question for traders and active investors in this sector is whether or not similar pullbacks in fellow homebuilders like Toll Brothers (NYSE: TOL) and Pulte Homes (NYSE: PHM).
Toll Brothers and Pulte Homes began the week with 7 out of 10 ratings, which put both stocks at the upper boundary of our neutral range. In Monday’s trading, shares of TOL traded largely sideways, edging higher by a fraction of a percent, while PHM continued lower, closing down for a third day in a row and trading to new, two-week lows.
Both stocks are set to begin trading on Tuesday with positive, short-term edges of just over 1%. Of the two, PHM earned the one-point ratings upgrade from a neutral, 7 out of 10, to a “consider buying” 8 out of 10.
Another homebuilder that is trading at levels where buyers historically have been inclined to come off the sidelines is KB Homes (NYSE: KBH), which we first highlighted in 7 Stocks You Need to Know for Wednesday. The stock has now closed lower for six days in a row after pulling back by another six and a half percent on Monday alone. Already beginning the session with “consider buying” ratings of 8 out of 10, shares of KB Home have been upgraded further to 9 out of 10 as the stock pulls back to new, short-term lows.
The positive edge of more than six and a half percent is a testament to the extreme nature of the pullback in KBH, which has finished in technically oversold territory for four conseuctive sessions. The selling in KBH has taken the stock to its lowest level since the beginning of February.
Traders and active investors looking to minimize single stock risk can always consider any one of the main exchange-traded funds that are composed of the top homebuilding stocks. Here, the iShares Dow Jones U.S. Home Construction Index Fund ETF (NYSE: ITB) is one of the more oversold, trading near breakeven levels on Monday after pulling back for five out of six sessions.
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