Signal Says KB Home Stock Could Hit 2007 Heights

The company is lower despite a top-line earnings beat

Deputy Editor
Sep 23, 2020 at 2:46 PM
facebook twitter linkedin


The shares of KB Home (NYSE:KBH) are down 4.4% at $38.70 this afternoon, brushing off the homebuilding company's better-than-expected fiscal third-quarter earnings and revenue -- announced yesterday after close. After the report, Keybanc downgraded the stock to "sector weight" from "overweight." However, no fewer than five analysts also raised their price target on KBH -- the highest from Credit Suisse to $48. Despite the dip today, more upside may be on the horizon for KB Home stock. The 60-day moving average has helped push the stock higher after its late-June pullback. Up 12.7% year-to-date, 

That's because today's dip also comes just one day after KBH scored a fresh 13-year high of $40.86. Plus, the equity is experiencing historically low implied volatility (IV), which, combined with a record high on the charts, has been a bullish combination for the stock in the past.

KBH Sep 23

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been two other times in the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower -- as was the case with yesterday's SVI of 57.4%, which sat in the 19th percentile of its 12-month range. The data shows the security was higher a month later both times, averaging a return of 5.9% for that time period.

From yesterday's record perch, a move of similar magnitude would put KBH above $43 and trading at its highest point since 2007. Also worth noting is KBH's 60-day moving average has helped push the stock higher after its late-June pullback.

What's more, the stock's Schaeffer's Volatility Scorecard (SVS) sits high at 93 out of 100. This means KBH has tended to exceed option traders' volatility expectations during the past year -- a boon for option buyers.
 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

SCHAEFFER'S JULY STOCKS REPORT AD
 


 


 
Special Offers from Schaeffer's Trading Partners