Remember when said David Tepper said he was buying the home builders, KB Home being one of them. That took some guts. However, it probably wasn’t the best idea. Especially if you were somebody who went along with Tepper and bought KB Home. Tepper wasn’t the only stock trading ‘guru’ who said you should buy the home builders though, James Altucher was another contrarian investor, although he didn’t have KB Home on his list of home builders to buy.
Reuters has the details on KB Homes earnings report this morning:
The Los Angeles-based homebuilder that targets first-time buyers, reported a wider second-quarter loss as revenue declined and the company recorded impairments and costs from a Nevada development.
The net loss for the three months ended May 31 was $68.5 million, or 89 cents a share, compared with a loss of $30.7 million, or 40 cents, a year earlier, the company said today in a statement. Analysts predicted a loss of 33 cents a share, the average of 16 estimates in a Bloomberg survey.
U.S. homebuilders are struggling as unemployment close to 9 percent and a glut of discounted foreclosures reduce demand for new properties. KB Home has communities in some of the markets hardest-hit by foreclosures, including Las Vegas, Riverside County in California and Phoenix.
“KB is getting whacked hard because it’s a first-time homebuilder operating in markets flooded by low-end product,” Demir Gjokaj, an analyst with New York-based ITG Investment Research Inc., said in an interview yesterday. “That said, nobody can win in this environment until we get the first-time buyer back.”
If you are a long term investor, and like to buy hated stocks, KB Home might be a good long term buy if it becomes one of those accidentally high yielding stocks that Cramer likes. KBH has a dividend yield of 2.50% right now. Seems like one could wait until it creeps up closer to 3%. However, the home building stocks might be a very, very long term buy, as in too long. Who wants to wait 5 or even ten years before these stocks recover. Be careful with these stocks. What’s your time trading time frame? If it’s long term, and you have a lot of patience, then you might get paid to wait with the dividend.