Underloved LGIH Stock Could Be Next Homebuilder to Rally

There was a massive rush to LGIH puts in late September

Oct 2, 2019 at 2:03 PM
facebook X logo linkedin


Housing stocks have had a good year on the charts, and the group is in focus again today thanks to Lennar's (LEN) earnings beat this morning. Some analysts were predicting more strength out of the housing sector, and for those interested in betting bullishly, one name to consider is LGI Homes Inc (NASDAQ:LGIH), which just flashed in the study performed for our Indicator of the Week.

In short, there's a ton of pessimism around LGIH shares, even though they're up more than 80% on a year-to-date basis, riding a nearly perfect uptrend along the way and touching a record high of $87.19 on Sept. 26. The stock was last seen at $81.94, putting it above the average 12-month analyst price target of $80.90, meaning some brokerage firms could come through and raise their views on the security.

The next notable data point for LGI Homes is the short interest ratio of 14.80, showing almost three weeks' worth of buying power in the hands of short sellers, going by average trading volumes. We tend to view any reading above 5.0 as elevated, so clearly LGIH's number suggests short covering could serve as another tailwind for the stock.

There's even extreme pessimism in the options pits, as put buying has dominated at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) during the past two weeks. The 10-day put/call volume ratio of 7.93 still ranks in the 80th annual percentile, even though the ratio's been fading since a massive spike late last month. To close out, it's worth noting that peak put open interest in the front-month October series sits just below at the 80 strike.

lgih stock oct 2

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI