By Nigam Arora & Dr. Natasha Arora
Signal(s) to enter, add, reduce, exit, hold or change.
KB Home (KBH) is long from $16.15. It is trading at $35.74. This represents a gain of 121%.
Here are the key points applicable to KBH:
- KBH is a home builder.
- Demand for housing in the price range and the geographic locations where KBH builds is strong.
- KBH reported earnings below the consensus and below the whisper numbers.
- Interest rates are rising and that is dampening sentiment for home builders.
- KBH trades at 1.1 times present tangible book value. This is very attractive.
- There is a risk of further demand slow down as interest rates continue to rise.
Zones
Partial profits have previously been taken.
On February 4, 2022, the buy zone was suspended in anticipation of rising interest rates. A new buy zone will be given when there is more clarity.
The very long term target zone remains $66 – $71.
Buyout Candidate
KBH is a buyout candidate. To date, 172 of The Arora Report portfolio companies have been bought out producing a fortune for long time subscribers. This performance is better than boutique firms charging upwards of $50,000 per year.
What To Do Now
For those holding KBH as part of a diversified portfolio, it is a matter of personal preference to continue to hold or take partial profits.
Those who do not have a well-diversified portfolio may consider taking full profits and exiting.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
