Why I'm Giving Homex Another Chance

I am going to give Homex (HXM) another chance in the portfolio after it's recent impressive earnings [Feb 27: Homex with a Very Nice Earnings Report]. I had held this earlier in the portfolio but had a measly 2% gain... this is not really a fast mover type of stock although it has had a huge run of late. As I wrote in February

This is actually a chart that a momentum chasing technical trader would dream of, but I'd rather buy it on a pullback, as it's just put on a 11% move and this is not a stock that has huge volatility so that is a substantial move for this type of stock.

Well, now I have the makings of a pullback as the stock is down 12% from recent highs of mid $64s range, down to $56s and approaching the support level of the 200 day moving average. Since the market is so weak, I don't want to overcommit capital, so I am only buying 200 shares for a starter position of 1% of the fund. The stock could easily break this key support level on a market sell off which would put it immediately in negative shape on its chart. With stocks like this, which are generally slow movers, it is more important to be prudent than in fast moving stocks which you can generally make up poorer entries with some trading along the way.

This stock has always been hard for me to value since it has no peer to compare to, but with $4+ EPS in 2008 it is trading at a reasonable 14x forward earnings, and should continue to grow in the 15-20%+ level for the next few years.

I've also added a bit to it's Brazilian brother, Gafisa (GFA) today in the $37 range. I continue to look for opportunities away from the United Debtors of America.

Disclosure: Long Homex, Gafisa in fund; no personal positions