Stock to Sell #3 – Lennar (LEN)
Homebuilder Lennar (LEN) is also a provider of financial services and an investor in distressed real estate through Rialto Capital Management. Although the company has exposure to the uncertainties of the real estate market, analysts expect revenue to increase 42% in fiscal 2013, ended in November, following a 33% rise in fiscal 2012.
But the stock’s chart is telling a different story. After triple-tops made in January, March and May, the stock experienced a sharp sell-off in June that penetrated support at a quadruple-bottom. Subsequent rallies in September and October failed at the 200-day moving average, now at $38.
Steady selling and a new MACD sell signal tell us that the stock is headed lower and that support at the September bottom at $32 will probably not hold. Sell LEN short at $36-plus with a stop-loss at $39.