27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
PulteGroup, Inc. (NYSE: PHM) stock pulled back like most other stocks during the most recent broad market sell-off.
The difference in Pulte, however, is that the pullback may have been the completion of an intermediate-term downside correction. The new move higher that has commenced might well be quite substantial in nature.
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Does the fundamental picture match up with the technicals?
What The Bulls See...
• An enterprise value of $7.95 billion that slightly exceeds a market capitalization of $7.17 billion
• A price-to-book ratio of 1.54
• A price-to-sales ratio of 1.27
• A P/E ratio of around 14 compared to 2015 estimated revenue and EPS growth of 11.6 percent and 31.2 percent respectively
• A net profit margin of 8.44 percent that spins off over $129.22 million annually
• A respectable balance sheet as evidenced by the debt-to-equity ratio of 41.01 percent and the current ratio of 3.19
• A healthy dividend yield of 1.6 percent annually
What The Bears See...
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• Unfortunately for the bears, the only ammunition they have is that the stock may have become overbought in the short run. It could, theoretically, pull back by about 5 to 6 percent before another push to the upside.
The Technical Take
Technicians note that Pulte stock appears to be in the early stages of the next big move to the upside. An “abc” correction to the downside appears to have just completed during the last market sell-off and the rally since then seems to be the next shot higher.
Using Fibonacci projections, the upside target range comes in between $26.81 and $28.57. Technicians note that buyers who are eagerly waiting to get involved will be looking to do so on a pullback to $18.18 -- the 50 percent retracement of the recent rally, as well as horizontal line support.
Overall...
Pulte appears to be a strong buy candidate on a pullback as the technicals could favor the bulls in the intermediate-term.
Only a close below $16.56 would disrupt the bulls' mojo.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.