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4 Up-Trending Smart Money Picks under $10 the Week of Oct. 24

October 25, 2011 | About:
Common wisdom tells us that we should ride on the coattails of institutional investors such as hedge fund or mutual fund managers (aka smart money) as they have the sophisticated research and competitive edge over retail investors.

Therefore this article will draw on Pershing Square’s investment idea on the rebound of housing market, particularly on Fortune Brands Home & Security (FBHS.N). More on the investment thesis here: http://uk.reuters.com/article/2011/10/19/us-hedgefunds-ackman-idUKTRE79H6GK20111019

Ackman opined at the most recent Value Investing Congress, "In order for this to be a good investment, it assumes a partial recovery in the housing market in the next five years. I think that's a very conservative assumption."

We ran a stock screen for stocks trading under $10 with an uptrend noted. One caveat is to scale down or exit position once the trend halts, in the near few weeks’ time. Also note that up-trends still persist despite this headline:http://www.foxbusiness.com/industries/2011/10/25/homebuilder-stocks-tumble-following-home-price-data/

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Beazer Homes USA Inc. (BZH) designs, builds, and sells single-family and multi-family homes in the United States. It offers homes for entry-level, move-up, or retirement-oriented buyers. The company sells its homes through commissioned new home sales counselors and independent brokers. Beazer Homes USA Inc. was founded in 1985 and is headquartered in Atlanta, Georgia.

Market cap: $43 million

Beta: 5.10,

Institutional shares owned of the company’s 58 million share float: 79.3%

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KB Home (KBH) operates as a homebuilding and financial services company in the United States. It constructs and sells various types of homes, including attached and detached single-family homes, townhomes, and condominiums primarily for first-time, move-up, and active adult homebuyers. The company also provides title and insurance services to homebuyers. In addition, it offers mortgage banking services to homebuyers through KBA Mortgage LLC, a joint venture with a subsidiary of Bank of America, N.A. The company delivered 7,346 homes in the year 2010. It operates in California, Arizona, Nevada, Colorado, Texas, Florida, Maryland, North Carolina, and Virginia. The company was formerly known as Kaufman and Broad Home Corporation and changed its name to KB Home in 2001. KB Home was founded in 1957 and is headquartered in Los Angeles, California.

Market cap: $553 million

Beta: 1.93

Institutional shares owned of the company’s 65 million share float 87.6%

This stock is a potential short squeeze candidate, with a short percentage of float of 53%.

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PulteGroup Inc. (PHM) through its subsidiaries, engages in homebuilding and financial services businesses primarily in the United States. The company's homebuilding business includes the acquisition and development of land primarily for residential purposes within the continental United States; and the construction of housing on such land targeted for first-time, first and second move-up, and active adult home buyers.

As of December 31, 2010, its homebuilding operations offered homes for sale in approximately 800 communities. The company's financial services business consists of mortgage banking and title operations. It arranges financing through the origination of mortgage loans for its homebuyers; sells such loans and the related servicing rights; and provides title insurance policies as an agent, and examination and closing services to its home buyers. The company was formerly known as Pulte Homes Inc. and changed its name to PulteGroup Inc. in March 2010. Pultegroup was founded in 1956 and is headquartered in Bloomfield Hills, Michigan.

Market cap: $1.84 billion

Beta: 1.36

Institutional shares owned of the company’s 336mil share float: 87.9%

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Standard Pacific Corp. (SPF) operates as a diversified builder of single-family attached and detached homes in the United States. It constructs homes targeting a range of homebuyers primarily move-up buyers in metropolitan markets in California, Florida, Arizona, Texas, the Carolinas, Colorado, and Nevada. The company, through its subsidiaries, provides mortgage loans to its homebuyers, as well as acts as a title insurance agent performing title examination services for Texas homebuyers. Standard Pacific Corp. was founded in 1986 and is headquartered in Irvine, California.

Market cap: $636 million

Beta 3.36

Institutional shares owned of the company’s 105 million share float: 83.8%

Disclosure: No positions

About the author:

Coeus Capital
CAIA and CHP charterholder. Long-biased US equities, with strong focus on small to mid-cap stocks (NYSE, NASDAQ, AMEX, OTC & ADR) utilizing fundamental and technical analysis. Agnostic investor, trader, writer and perpetual student of the market. Contact Coeus at coeuscapitalcall@gmail.com

Visit Coeus Capital's Website


Rating: 2.9/5 (28 votes)

Comments

paulwitt
Paulwitt - 3 years ago
With limited time and energy, instead of picking stocks in the sector, I decided to buy the (ITB) Home Construction ETF. It is currently around $10 and at its peak it was $45.

This ETF includes not only homebuilders, but also companies like Sherwin Williams and Home Depot.

Please leave your comment:


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