Continue reading Hovnanian shares slide on earnings, housing woes

Hovnanian shares slide on earnings, housing woes originally appeared on BloggingStocks on Thu, 03 Sep 2009 14:00:00 EST. Please see our terms for use of feeds.

"The economic crisis began in the housing sector and will likely end there," says Stephen Leeb. In his top-notch The Complete Investor he takes a contrary look at two homebuilders.

"Though my view may sound contrarian to a fault, a close look at the housing market, especially given recent government actions, suggests a recovery will happen sooner rather than later and be stronger rather than weaker.

"When home prices decline, buyers pull back, afraid of buying too soon. This leads to further declines and further buyer reluctance. No surprise, then, that housing starts have fallen dramatically.

"Meanwhile, consumers, who had been borrowing money based on the value of their homes, found this source of credit drying up, which dealt a further blow to the economy.

"It is a vicious circle indeed. Ultimately, though, it will almost certainly end with more willing lenders and a stronger housing market as the huge amounts of money being flooded into the system start boosting balance sheets of potential lenders.

Continue reading Building value: Contrary call on homebuilders

Building value: Contrary call on homebuilders originally appeared on BloggingStocks on Mon, 10 Nov 2008 13:18:00 EST. Please see our terms for use of feeds.

Tool supplier Stanley Works (NYSE: SWK) remains optimistic about earnings into 2008, despite deterioration of the U.S. homebuilding market. Even in 4Q2007, when the domestic construction market softened like warm butter, Stanley Works managed to post more than respectable earnings. 4Q sales increased 15% to $1.2 billion. Diluted EPS increased 7% to $1.11, operating margins increased and free cash flow increased 89% from 4Q2006.

4Q2007 was a tough quarter in the U.S., as subprime mortgage losses ran into the billions, banks tightened credit, and construction slowed dramatically. Despite the meltdown in the U.S. market, Stanley posted double-digit sales increases in all its international markets, which helped to offset slower sales in the U.S. The story is the same for FY2007.

Overall, the company is in good shape with net sales up 12% to $4.5 billion, although only 2% of that growth is organic. More than half of the increase was due to acquisitions. FY2007 diluted EPS increased 15% to $4.00, and free cash flow increased by $99 million to $457 million. Despite forecasting an organic growth rate of 0-1%, CEO John Lundgren states that Stanley Works is well positioned to withstand a possible U.S. recession.

CEO says Stanley Works (SWK) girded for recession originally appeared on BloggingStocks on Thu, 31 Jan 2008 12:24:00 EST. Please see our terms for use of feeds.

Furniture Brands-(NYSE:FBN) markets residential furniture through Broyhill Furniture, Lane Furniture, Thomasville Furniture and HDM Furniture. FBN is recently up $3.30 to $13.44 after Samson Holding reported a 14.9% stake in FBN. Samson has indicated it may seek to acquire control of the company. FBN reported June 2007 quarterly total revenue of $535 million. FBN will host an investor day on 10/23 in New York City. FBN October option implied volatility of 54 is above its 26-week average of 35 according to Track Data, suggesting larger price risk.

USG-(NYSE: USG), a manufacturer and distributor of building materials, is recently up $.57 to $38.14 on renewed & unconfirmed takeover chatter. Unconfirmed chatter is circulating today that a consortium of four of the largest Chinese construction companies wants to acquire a 24% stake in USG. China Overseas Land is one of the names mentioned in the consortium. Warren Buffet is an owner of approximately 19% of USG. USG October 40 calls have traded 72 times on transaction volume of 2,103 contracts above its open interest of 2,013 contracts. USG October option implied volatility of 42 is above its 26-week average of 32 according to Track Data suggesting larger price risk.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Option update: Furniture Brands & USG volatility up originally appeared on BloggingStocks on Mon, 01 Oct 2007 15:15:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• EMC Corporation (NYSE: EMC) was initiated with a Buy rating and $24 target at Banc of America as they believe the company's core business is undervalued and should benefit from penetration of new market segments. Deutsche Bank views shares of the stock as fully valued at current levels, starting shares off with a Hold rating and $20 target. Jefferies believes the divergence in valuation of core EMC and majority-held VMWare Inc (NYSE: VMW) creates an attractive entry point. The firm started EMC shares with a Buy rating and $25 target.
  
• CIBC finds shares of Blue Nile (NASDAQ: NILE) fairly valued and sees challenges as competition increases. The firm started shares with a Sector Performer rating.
  
• CIBC also initiated shares of Getty Images Inc (NYSE: GYI) with a Sector Performer rating, as the firm believes the company's earnings visibility is limited while the business model is in transition.
  
• Coverage of Sonus Networks Inc (NASDAQ: SONS) was resumed with an Overweight rating and $8 target at Thomas Weisel. Their checks indicate the company is experiencing increased order activity in 2H07, and they expect an improved Q3 followed by a very strong Q4.

• Credit Suisse Group (NYSE: CS) was initiated with an Overweight rating at Morgan Stanley.
  
• Oppenheimer initiated Consolidated Communications Holdings Inc (NASDAQ: CNSL) with a Buy rating and $24 target.
  
• UBS initiated the U.S. homebuilding sector with a Pessimistic outlook.
  
• UBS initiated shares of Nvidia Corporation (NASDAQ: NVDA) with a Neutral rating and $37 target.
  
• Bear started shares of The Dow Chemical Company (NYSE: DOW) with a Peer Perform rating.
  

Analyst initiations: EMC, NILE, GYI and SONS originally appeared on BloggingStocks on Tue, 25 Sep 2007 11:20:00 EST. Please see our terms for use of feeds.

Continue reading Lowe's (LOW) up strong in the premarket on strong earnings

Lowe's (LOW) up strong in the premarket on strong earnings originally appeared on BloggingStocks on Mon, 20 Aug 2007 09:00:00 EST. Please see our terms for use of feeds.

Cramer rides the bulls... originally appeared on BloggingStocks on Fri, 06 Jul 2007 18:01:00 EST. Please see our terms for use of feeds.

In a recent interview, CFO Joel Rassman of Toll Brothers (NYSE: TOL), the luxury home builder active in 50 U.S. markets, argued that the housing market is influenced much more by consumer confidence and less by specific economic policies such as interest rate changes by the Federal Reserve. Without making personal political statements, Mr. Rassman argued that the housing market will pick up when consumers feel more inspired by their government, feel more confident in the government's policies and its ability to get things done. Mr. Rassman stated that the average housing market slump is generally about 18 months in duration. Consumer confidence dropped dramatically after Hurricane Katrina due to the government's perceived inability to deal with that situation. Mr. Rassman places less importance on the federal budget deficit and mortgage interest rates.

CFO Rassman tried to make the case that the current slump in the housing market is different from previous slumps. The current slump is due to an oversupply of housing rather than job losses, higher interest rates or a slowing economy. He forecast that the housing market will pick up in the spring, right about 18 months after the slump began. Housing stock investors may well share Mr. Rassman's guarded optimism. Just before Toll Brothers released 1Q 2007 figures, investors bid up Toll Brothers options to several dollars above the price of the stock, indicating they think the stock, currently trading at $29.48, will go higher.

Toll Brothers 1Q 2007 figures were, as expected, not good. 1Q 2007 net income was $54.3 million, one-third of 1Q 2006 record net income of $163.9 million. 1Q 2007 total revenues were just over $1 billion, down 19% from 1Q 2006. The number of signed contracts in 1Q 2007 was down 14% from 1Q 2006. The number of buildable lots Toll Brothers controls nationwide is down 26% to 67,500. Despite all the downward pressures in the housing markets, Toll Brothers still plans to build more than 6,000 houses in FY 2007.

Mr. Rassman firmly believes that declining home prices are building up demand for homes. As soon as consumers think the market has bottomed out, which Mr. Rassman argues will be by mid-year, home buyers will begin to enter the market in large numbers as they will not want to wait until it is too late.

Toll Brothers CFO optimistic on housing, eventually originally appeared on BloggingStocks on Mon, 05 Mar 2007 13:16:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Credit Suisse upgraded Under Armor Inc (NYSE: UA) to Outperform from Neutral with a $65 target and believes that the company is emerging as one of the premier global athletic brands.

• JMP Securities upgraded shares of Cardinal Health Inc (NYSE: CAH) to Outperform from Market Perform to reflect their expectation for accelerated earnings growth over the next three years.

• Friedman, Billings upgraded shares of Urban Outfitters Inc (NASDAQ: URBN) to Outperform from Market Perform to reflect positive momentum in URBN's core division, inventory control and easy upcoming comps.

• Stanford upgraded shares of Vonage Holdings (NYSE: VG) to Hold from Sell on valuation.

• Goldman Sachs upgraded the US Homebuilding Sector to Neutral from Sell saying the worst may be behind the group, but fundamentals remain troubling. The analyst said the next meaningful data will be from the Spring selling season, 6-8 weeks away.
• Goldman upgraded D.R. Horton Inc (NYSE: DHI), MDC Holdings Inc (NYSE: MDC) & Toll Brothers Inc (NYSE: TOL) to Buy from Neutral due to lower-risk at this point in the cycle. The Ryland Group Inc (NYSE: RYL) was upgraded to Neutral from Sell.

Analyst upgrades 1-23-07: Under Armor stands tall originally appeared on BloggingStocks on Tue, 23 Jan 2007 11:23:00 EST. Please see our terms for use of feeds.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Lennar Corp. (NYSE: LEN) is the favorite conservative investment for 2007 from Bernie Schaeffer, editor of The Option Advisor. He notes, "Lennar, one of the largest homebuilding firms in the U.S., is built on a very solid foundation.

"For more than 20 quarters running, the stock has exceeded or matched analysts' per-share earnings expectations. Despite negative earnings revisions and poor housing statistics during the past few months, homebuilding stocks have actually rallied from their July 2006 lows.

"For its part, LEN is back up near six-month highs. It has been a relative-strength leader when compared to its peers in the outperforming ISE Homebuilders Index. Meanwhile, options players are firmly entrenched in the bearish camp. And, nearly 9% of the equity's float has been sold short.

"Analysts are still leery of LEN, as evidenced by the latest Zacks data. Of the 12 brokerage firms ranking the shares, five have awarded a 'hold' rating while two list the stock as a 'strong sell.' A continued upward drive in the shares could spur some upgrade activity, drawing positive attention toward the equity."

To see Bernie's favorite speculative idea for 2007, click here.

Top Picks 2007: Schaeffer sees solid foundation under Lennar originally appeared on BloggingStocks on Thu, 21 Dec 2006 08:30:00 EST. Please see our terms for use of feeds.

Home Depot sales could fall in 2007 originally appeared on BloggingStocks on Wed, 08 Nov 2006 12:41:00 EST. Please see our terms for use of feeds.

Cramer says sell alt.energy names, buy CROX originally appeared on BloggingStocks on Mon, 25 Sep 2006 14:49:00 EST. Please see our terms for use of feeds.