1:15pm (EST)
The market got some good news from the housing industry this morning which seems to be helping fuel the continued rally. The National Association of Realtors said sale contracts rose 1% in December as home buyers scrambled to take advantage of a first-time homebuyer tax credit before it was set to expire last November. It was the ninth improvement over the past 10 months.
Evidence that things could finally be turning around was bolstered by D.R. Horton (DHI, $13.13, up $1.22) which posted its first profit since 2007. The company posted earnings of $192 million, or $0.56 a share, versus a year-earlier loss of $63 million, or $0.20 a share. Much of its profit came from a tax gain, but its revenue rose because of a 36% spike in home sales.
Toll Brothers (TOL, $19.39, up $0.77) and Pulte Homes (PHM, $11.16, up $0.60) are also up on the news.
Elsewhere, Ford (F, $11.48, up $0.46) said auto sales rose 25% in January as the company continues to gain market share from its peers. Found On Road Dead currently has 16% of the U.S. market pie but we think they can reach over 20% by the summer.
We had some nice trades in Ford last year although they took 3 months to come to fruition. From May to August our subscribers rode the December 5 and 6 call options for gains of 100% and 75%, respectively. We also played the August 7 call options and subscribers came out 62% ahead a week later.
Our price-target for Ford was $10 by the end of 2009 and we nailed it as we kept recommending call options. Wall Street couldn’t see the turnaround and many of the analysts wouldn’t go near this stock last summer. It looks like we should have recommended a LEAP option, huh?
We are still keeping a watch on Ford and its 52-week high is $12.14.
Currently, the Dow is up 88 points to 10,274.86 while the S&P 500 is higher by 11 points and is right at 1,100. The Nasdaq is showing a 12 point pop and is at 2,184.
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