Trade of the Day: D.R. Horton (DHI)

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We’ve seen lots of ups and downs in the market over the past month, but homebuilding stocks have managed to avoid this trend, for the most part. In fact, the Residential Construction Industry has seen excellent growth over the past year, and many of the stocks in this industry, including today’s recommendation, have taken advantage of this strength.

D.R. Horton, Inc. (DHI) is a homebuilding company, and it is currently recognized as the largest home construction company in the United States. Since it was founded more than 35 years ago, the company has expanded from Texas into the Southeast, Mid-Atlantic, West Coast and Southwest. The company is known for its efficiency and has also gained attention by using energy-efficient features in its new homes.

Though D.R. Horton has experienced some volatility over the past 11 months, it has consistently outperformed its industry (Residential Construction) and the market as a whole. In fact, DHI shares are up nearly 30% year-to-date, while the S&P 500 is up just over 1%.

DHI shares rose about 10% in November, and I expect shares to continue to trek upward. Overall, Q4 earnings growth is expected to come in at a 5.1% increase over last year, while Q1 2016 earnings are currently projected to have a 22.5% increase over Q1 2015.

Trade of the Day: D.R. Horton, Inc. (DHI)

The Turner Analytics database rates DHI as a strong buy. The stock is very strong, both fundamentally (82 out of 100) and technically (92 out of 100), and it has significant near-term upward momentum.

I recommend buying DHI at $32.62 or better. Set your stop at $28.61 and your near-term target at $35.97.

Mike Turner and his team of software engineers developed Turner Analytics, a sophisticated software market and trade-timing system that provides unbiased, quantifiable recommendations on thousands of equities and rates, ranks and scores these equities from best to worst in an easy-to-use on-line tool for individual investors. He is also the editor of Signal Investor.

Most recently, Mike launched Quick Hit Trader. This trading service is based on weekly analysis of the 6,000+ stocks and ETFs in his proprietary Turner Analytics computer stock-rating system. Every Monday before the market open, Mike emails subscribers his three best trades for the week, including the buy, sell and target price.


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