DailyWealth Investment Newsletter  

About DailyWealth Premium Content DailyWealth Archive
DailyWealth Investment Newsletter DailyWealth Contributors DailyWealth Resources DailyWealth Market Window
 
DailyWealth Print Edition Print Edition | Sponsored Link:
True Wealth Login

Steve’s note to True Wealth subscribers: Just to clarify last Friday’s DailyWealth, we are not selling any of our True Wealth holdings except our speculative position in UAPIX (which made us over 30% since we bought in July). I don’t think stocks in general will do much for the rest of the year, however it’s not worth selling “core” holdings.

The Bull Run in Homebuilders is Underway
by Dr. Steve Sjuggerud
December 04, 2006

It's not easy being the only guy buying homebuilders...

Two months ago, we had our Alliance Conference... a conference just for our “lifetime” subscribers. At that conference, I gave my top five investment ideas right now. One of them was homebuilders.

One subscriber with a Southern accent approached me after my speech and said, “Steve, I shoar like yer ideas... but I tell ya right now... I ain't buyin housing stocks.”

It's tough to be a contrarian when even your best subscribers can't pull the trigger on your ideas. Heck, I have to admit, I was apprehensive about recommending homebuilders right up until the moment I hit “send” on my issue.

But I know that buying what's HATED, CHEAP, and JUST STARTING an uptrend works. Right now, homebuilders fit the bill perfectly. People just can't stand the idea of owning these stocks. Most of them trade for less than seven time earnings. And now, with homebuilders up strongly in the past few months, I just HAD to recommend them.

Now don't think I've lost my mind... I'm not predicting a bull market in real estate. There's a distinction to make here. The reason I'm recommending shares of homebuilders isn’t because I expect a housing recovery – this is not a story about rising home prices. It's a story about cheap, hated stocks.

Yes, the news and earnings for the homebuilders is terrible. But on Thursday shares of the entire index of homebuilding stocks rose over 5% (as measured by the Dow Jones Home Construction Index).

Over 5% in one day – for an index!

What that move tells me is that it is “GAME ON” in homebuilding stocks. You need to be in this trade now. That 5% across-the-board move is great confirmation that the bull run is underway.

The fact that homebuilders were up a second day on Friday after such a big move on Thursday and that they soared while the overall markets lost money from Wednesday's to Friday's close is even more bullish.

You haven't missed it... yet. Five percent out of what could turn out to be 200% in a few years is nothing.

Go back to the November 20th DailyWealth issue, Where to Get 200% in Two Years, and you'll read the other reasons to be bullish. When you combine those comments with the positive price action late last week, you can understand today's conclusion:

At DailyWealth, we are maximum bullish on homebuilders right now.

Good investing,

Steve

Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.

Sign up today to read more investment ideas from Steve Sjuggerud.

Email a Friend

Delicious
Reddit

Digg

RSS

NEW HIGHS OF NOTE LAST WEEK

ExxonMobil (XOM)... Big Oil
Chevron (CVX)... Big Oil
PetroChina (PTR)... Big Oil
ABB Ltd. (ABB)... electrical equipment and engineering
Foster Wheeler (FWLT)... engineering and construction
Lafarge (LR)... world’s largest cement producer
Diageo (DEO)... world’s largest producer of booze
Lockheed Martin (LMT)... the bull market in war
Agrium (AGU)... agriculture
Syngenta (SYT)... agriculture
Posco (PKX)... Dan Ferris Extreme Value pick
KDH Humboldt Wedag (KHDH)... Dan Ferris Extreme Value pick
American Real Estate Partners (ACP)... Dan Ferris Extreme Value pick
Silver Standard Resources (SSRI)... silver
Yamana Gold (AUY)... gold
Williams Companies (WMB)... pipelines... Best New Income Play in the Market
Enterprise Products (EPD)... pipelines... Best New Income Play in the Market
Energy Transfer Partners (ETP)... Best New Income Play in the Market
American Tower (AMT)... cell towers
Aberdeen Asia-Pacific Income Fund (FAX)... Asian bond fund
Corn, Soybeans, Coffee
British Pound, Australian Dollar, Euro

NEW LOW OF NOTE LAST WEEK

The U.S. Dollar

“Optimism is spreading throughout North Dakota, which is in far better position than most states to exploit surging demand for both fossil fuels and fuels made from corn and other renewable resources.

As oil prices have soared in recent years, alternatives like ethanol have grown increasingly economical.

Over the past two years, renewable energy projects that will cost more than $1 billion have been announced in the state, including five ethanol plants, three biodiesel plants and five wind farms. Oil taxes have helped to generate a $500 million state budget surplus.”

- Wall Street Journal

“The bottom line is that the corn-based ethanol business isn’t all it’s cracked up to be.

Even with the government mandates for ethanol usage, companies in this sector are going to have a difficult time maintaining profitability as more and more plants come online.

Stocks in this sector may offer good short-term trading opportunities, but it’s not a good setup for long-term investors.

Cellulosic ethanol, on the other hand, is the next big growth story in the renewable energy storybook. The most explosive growth should come from the companies that produce and market the enzymes used in cellulosic ethanol production.”

- Jeff Clark,
The Big Trend Report

Home | About DailyWealth | Premium Content | DailyWealth Archive | Contributors
DailyWealth Resources | Research Reports | Privacy Policy

Customer Service: 1-888-261-2693 – Copyright 2008 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202