Price has been dropping and August home sales should be out middle of next week. I had a good for 60-days order executed at Tuesday’s low so I’m not buying today. But I’ll be following the price on Monday in case it gets under $44. “Should” be a good sales number.
Buying opportunity? I think opportunities are relative. Relative to other places where your capital can be deployed. Coincidentally, I’ve been thinking about LGIH. Specifically, I’m thinking about what could move the stock higher before the next earnings release in November. There were concerns about LGIH in early 2017. Now those concerns have been dispelled and the stock has run up significantly. I think that while the monthly sales figures that are released during the first week of each month will likely surprise to the upside. However, I am skeptical that the stock will move significantly as a result. I think the stock will likely move together with the other homebuilders. At least until November (around November 8th) when LGIH will probably beat and raise again.
So today I sold some of my LGIH shares. I had a 9% position and now I have a 7.3% position. Where did I put that money? I added to my top 2 holdings: SHOP and NVDA.
I bought a little SHOP today at $104.94. The last 2 days SHOP has been up counter to the market and counter to tech. The volume today is already above the average volume and we are only halfway through the trading day. I’m not a big technical analysis guy but I think that maybe we will see a nice run in SHOP in the coming weeks. I also think that SHOP will have an excellent earnings result when they report in early November (around November 2nd). The key thing to watch, I think, will be how many new merchants they add in the 3rd quarter. There was a significant acceleration of merchant additions in Q2 and if this continues in Q3, look out, the shares could really rally. The shares I bought today are a trading position, and my decision to stay in will depend on SHOP’s stock price and some other stock prices move.
I also bought some more NVDA today at $167.00. I think this stock could also break out soon. I also think that the Q3 result will beat and beat across multiple business lines including data center, cryptocurrency, and gaming. I expect NVDA will report earnings around November 9th.
So I didn’t sell LGIH because I think it will do poorly. I sold and redeployed because I am making a bet that NVDA and SHOP stocks will outperform LGIH in the coming weeks. It is a bet based on how I see relatively between these particular stocks, and it may not turn out to be the right call. We will see…
Chris