{"id":32722,"date":"2016-01-22T00:15:09","date_gmt":"2016-01-22T08:15:09","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=32722"},"modified":"2016-01-22T00:48:47","modified_gmt":"2016-01-22T08:48:47","slug":"chart-carnage-home-builders-under-duress","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2016\/01\/22\/chart-carnage-home-builders-under-duress\/","title":{"rendered":"Chart Carnage: Home Builders Under Duress"},"content":{"rendered":"

When I decided to start writing a monthly summary of the status of the housing market<\/a>, I had assumed that housing was going to remain in or settle into a general holding pattern. I assumed little was going to happen to the upside or the downside for a while. Under those conditions, it did not make sense to rush to analyze every housing report the minute it arrived. As luck would have it, I made this switch just ahead of all heck breaking loose in the stock market. Ironically, I even used the term “coiled spring” to describe the stasis in the market.<\/p>\n

This has been a tough time for the stock market<\/a>. As investors connect dots across negative drivers to draw a picture of a looming economic calamity, cyclical sectors have taken their own special pounding. Home builders have quickly gone from a state of serene market out-performance to a rude awakening to what in some cases are multi-year lows. The most hapless stocks are trading back to levels last seen when housing was still rising out of its 2012 trough.<\/p>\n

Pictures speak loudly. I have posted below monthly charts of all the home builder stocks I follow the most. I placed a black horizontal line at the most recent intra-day low to provide a reference to the depth of the current selling. The captions include the name of the home builder and the price-to-book ratio pulled from Yahoo Finance. Notice the large divergence in performance and valuation. The market has quickly priced in the most trouble for the smallest and\/or most regionally concentrated builders. Suddenly, diversification and size are clear kings of the lots. LGI Homes (LGIH) is still a notable exception.<\/p>\n


\n
\"Beazer<\/a>
Beazer Homes USA Inc. (BZH): 0.4<\/figcaption><\/figure><\/p>\n
\"Century<\/a>
Century Communities, Inc. (CCS): 0.7<\/figcaption><\/figure>\n
\"DR<\/a>
DR Horton Inc. (DHI): 1.7<\/figcaption><\/figure>\n
\"Hovnanian<\/a>
Hovnanian Enterprises Inc. (HOV): N\/A<\/figcaption><\/figure>\n
\"KB<\/a>
KB Home (KBH): 0.5<\/figcaption><\/figure>\n
\"Lennar<\/a>
Lennar Corporation (LEN): 1.6<\/figcaption><\/figure>\n
\n

$LGIH<\/a> has reversed all gains fr Aug, 2015 post-earnings breakout. Down 40% fr all-time hi (Dec, 2015). Good risk\/reward spot to get back in<\/p>\n

— Dr. Duru (@DrDuru) January 21, 2016<\/a><\/p><\/blockquote>\n