Trading Places with Tom Bowley

Building A Solid Portfolio Starts With A Strong Foundation

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I write about this a lot. Putting a group of stocks together that have (a) beaten Wall Street revenue and EPS estimates in its latest quarter, (b) belong to one of the "favored" industry groups on Wall Street, and (c) show strong technicals, including bullish volume trends leads to outperformance.

Given the current low interest rate environment, home construction is certainly one of those favored industry groups. Not only have we seen an absolute breakout on its chart, but it's also been one of the best performing industry groups relative to the S&P 500:

The clearing of the early-January price high was important as the group is now in "blue sky territory" with no overhead price resistance. That doesn't mean it'll be straight up from here, but the economic environment and the chart suggests this group isn't done.

Next up would be the charts of component stocks. I have a few favorites in the group, but one that quickly comes to mind is Pulte Homes (PHM). Check this one out:

PHM recently reported excellent quarterly results. Its EPS was 1.14 vs. 1.08 consensus estimates. Rapid EPS expansion is one factor that leads to strong price appreciation. I expect to see more of this from both PHM and the home construction group as a whole.

In fact, my Trading Places LIVE show begins very shortly at 9am EST and lasts right up until the market opens at 9:30am. I'm planning to break down the home construction group. Feel free to join me. Here's the link you can follow.

https://zoom.us/j/248920901

If you join and you're not currently a free EB Digest subscriber, I'll be happy to add you to our community. If you're too late to join, write to us at "support@earningsbeats.com" and we'll make sure you get the recording.

Thanks and have a great day!

Happy trading,

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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