Time To Buy Housing Stocks Like DR Horton

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 |  About: D. R. Horton Inc. (DHI)
by: James Stocklasar Thomas Jr.

The recent pull-back after last week's down market looks to have opened a great opportunity to carve out a position in housing stocks that have been in a steady up-trend. Lennar (NYSE:LEN), Toll Brothers (NYSE:TOL), KB Home (NYSE:KBH), and DR Horton (NYSE:DHI) are all up on Monday:

  • Lennar - Up 2.14%
  • Toll Brothers - Up 2.29%
  • KB Home - Up 3.85%
  • DR Horton - Up 2.51%

As a stock buyer, I own DR Horton because not only do I think it's a part of a general housing uptrend, but I have personal experience with their product/ It is a product that I would describe as "high quality." Therefore, I'm going to focus on why DR Horton looks like a good buy though it is certainly not the only one in a pool of good choices.

DHI as the chart illustrates has recently pulled back, but is again showing bullish strength on Monday. After running from $17 to $22, the stock has had a near 45% reloading pull-back right around the 50 day moving average.

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(Click to enlarge)

If positive market sentiment about the housing market holds riding on the lower Bollinger band could signal a bullish turn to the upside. In fact, looking at a longer term chart DHI has repeatedly bounced off the lower Bollinger band each time it's pulled back or you can use the 50 day moving average.

Click to enlarge
(Click to enlarge)

I have a $45 target for TOL, a $45 target for LEN, a $25 target for KBH, and a $30 target for DHI. These all assume the economy avoids a fiscal cliff and the housing industry continues to rebound.

Disclosure: I am long DHI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Investors buy and/or sell at their own risk. I declare that I may trade any stock at any time mentioned in this article. For me "long" is until I sell. I do not "short" stocks. This article is for entertainment purposes only. You are duly warned not to use this article for individual investor advice and you should seek the advice of a market professional.