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High-Growth Investments
Builders FirstSource, Inc.
Builders FirstSource, Inc. (BLDR) is a leading provider of building products in the U.S., with about 500 locations. The company offers everything that homebuilders need for new home construction, including wall panels, drywall, doors, stairs, roof and floor trusses, windows and siding.
So, the Federal Reserve’s recent decision to stand pat for the third-straight month and outlook for key interest rates cuts in 2024 is great news for Builders FirstSource. The fact is the Fed’s decision is causing mortgage rates to decline and that could ignite more home construction – and in turn, more demand for Builders FirstSource’s products.
For the fourth quarter, the current consensus estimate calls for $2.55 per share earnings and sales of $4.01 billion. That’s down from earnings of $3.21 per share and sales of $4.36 billion in the fourth quarter of 2022. However, the company has a history of posting positive earnings surprises, and the analyst community has upped earnings estimates over the past month. BLDR is a Moderately Aggressive buy below $183.
SOM Technicals:
11-17-23: Closed at 133.59. Trade pressures are up. Volumes are bullish. The next target up is 157.31.
11-26-23: Closed at 134.71. Trade pressures are up. Volumes are now neutral. The next target up is 138.72.
12-1-23: Closed at 139.28. Trade pressures are down into the neutral zone. Volumes are bullish. The next target up is 148.97.
12-9-23:Closed at 147.70. Trade pressures are up. Volumes are bullish. The next target up is 156.81 , the prior high.
12-15-23: Closed at 162.51. Trade pressures are up but turning over. Volumes are now neutral. The next target down is 152.40.
12-30-23: Closed at 166.94. Trade pressures are up but tuning over. Volumes are neutral. The next target down is 158.13.
1-6-24: Closed at 159.78. Trade pressures are down. Volumes are neutral. The next target down is 145.22.
1-12-24: Closed at 167.39. Trade pressures are up. Volumes are bullish. The next target up is 171.03. A close below 158 starts a short.
1-20-24: Closed at 172.51. Trade pressures are up. Volumes are bullish. The next target up is 181.14.
Eli Lilly & Company
Eli Lilly & Company (LLY) remains a leading player in the weight loss industry. Its Zepbound treatment recently received FDA approval and should be available by the end of this year. You may recall that the drug manufacturer’s treatment for type 2 diabetes, Mounjaro, already received FDA approval, and this recent approval expands the indication for the drug.
Aside from its weight-loss and diabetes treatments, Eli Lilly has more than 100 drugs in its pipeline – and it continues to research and develop new treatments to improve the lives of its patients. And its efforts, coupled with robust demand for its treatments, continue to add to the company’s top and bottom lines.
Eli Lilly will release results for its fourth quarter in fiscal year 2023 on February 6, 2024. Fourth-quarter earnings are forecast to increase 33% year-over-year to $2.78 per share, up from $2.09 per share in the same quarter a year ago. Revenue is expected to grow 22.5% year-over-year to $8.94 billion. LLY is a Moderately Aggressive buy below $619.
SOM Technicals:
10-07-23: Closed at 567.87. Trade pressures are up. Volumes are now bullish. The next target up is 575.41.
10-14-23: closed at 609.20. Trade pressures are up and trending. Volumes are now bearish. The next target up is 636.00. There is the large gap near 460 to fill.
10-27-23: Closed at 560.23. Trade pressures are down. Volumes are bearish. The next target down is 559.00.
11-3-23: Closed at 567.81. Trade pressures are up but turning down. Volumes are neutral. The next target down is 535.00.
11-10-23: Closed at 597.50. Trade pressures are down. Volumes are neutral. Rolling over after the rally, the next target down is 544.70.
11-17-23: Closed at 591.74. Trade pressures are down but rising. Volumes are neutral. The next target up is 629.97.
11-26-23: Closed at 601.10. Trade pressures are up Volumes are neutral. In consolidation. The next target up is 619.40.
12-1-23: Closed at 584.04. Trade pressures are down. Volumes are bearish. The next target down is 573.69.
12-9-23: Closed at 598.05. Trade pressures are up. Volumes are bullish. The next target up is 611.72.
12-15-23: Closed at 571.22. Trade pressures are down. Volumes are down. The next target down is 55.74 then 529.00.
12-30-23: Closed at 581.60. Trade pressures are up. Volumes are bullish. The next target down is 560.26.
1-6-24: Closed at 618.55. Trade pressures are up. Volumes are neutral. The next target up is a retest of the 636.15 target.
1-12-24: Closed at 642.92. Trade pressures are up. Volumes are bullish. The next target up is 664.52.
1-20-24: Closed at 628.58. Trade pressures are down. Volumes are neutral. The next target down is 606.55.
Royal Caribbean Cruises Ltd.
Royal Caribbean Cruises Ltd. (RCL) is a popular cruise line that provides unique vacation experiences at sea, with its dining options, high-quality accommodations, on-board entertainment and excursions on shore. The company operates a fleet of more than 60 cruise ships that travel to 270+ destinations around the world.
And in the post-pandemic world, Royal Caribbean Cruises has experienced strong demand for the experiences it offers. In the third quarter, adjusted earnings surged 1,519% year-over-year to $1.1 billion, or $3.85 per share, which topped estimates for $3.48 per share. Third-quarter revenue of $4.2 billion also beat expectations for $4.05 billion.
Given the strong quarterly results, Royal Caribbean Cruises increased its outlook for fiscal year 2023. In turn, the analyst community has also upped fourth-quarter earnings estimates. Fourth-quarter earnings are now forecast to come in at $1.10 per share, compared to a loss of $1.12 in the same quarter a year ago and analysts’ previous estimates of $1.05 per share. RCL is a Moderately Aggressive buy below $146.
SOM Technicals:
8-25-23: Closed at 99.77. Trade pressures are up but turning down. Volumes are neutral. The next target down is 96.02.
9-1-23: Closed at 97.70. Trade pressures are down. Volumes are bearish. The next target down is 85.56.
9-8-23: Closed at 97.36. Trade pressures are down but rising. Volumes are bearish. The next target down is 85.56.
9-16-23: Closed at 97.42. Trade pressures are up but turning down. Volumes are neutral. The next target down is 95.74.
9-23-23: Closed at 91.204. Trade pressures are down. Volumes are bearish. The next target down is 85.58.
12-30-23: Closed at 129.49. Trade pressures are up. Volumes are bullish The next target up is 131.93.
1-6-24: Closed at 122.66. Trade pressures are up into the neutral zone. Volumes are bullish. The next target down is 113.67.
1-12-24: Closed at 121.21. Trade pressures are down. Volumes are bearish. The next target down is 113.67.
1-20-24: Closed at 127.00. Trade pressures are up. Volumes are bullish. The next target up is 130.97.
Toll Brothers, Inc.
Toll Brothers, Inc. (TOL) constructs quality luxury home communities in the U.S. and is committed to rewarding its shareholders. Thanks to a strong operating cash flow, Toll Brothers recently announced that it will buy back 20% of its outstanding shares and continue to increase its quarterly dividend.
Company management noted that its outstanding share count has declined by almost 40% thanks to stock buybacks. Toll Brothers has also upped its quarterly dividend by 162.5% over the past six years. It plans to pay a $0.21 per share quarterly dividend on January 26 to all shareholders of record on January 12.
Clearly, Toll Brothers’ management remains bullish on the company’s booming business – and for good reason! In the fourth quarter of fiscal year 2023, Toll Brothers delivered 2,755 homes and achieved revenue of $2.95 billion. Fourth-quarter earnings were $445.5 million, or $4.11 per share. Analysts expected $3.72 per share and revenue of $2.77 billion. TOL is a Moderately Aggressive buy below $112.
SOM Technicals:
8-25-23: Closed at 77.40. Trade pressures are down. Volumes are bullish. The next target down is 72.12.
9-1-23: Closed at 83.83. Trade pressures are up/ volumes are bullish. The next target up is 85.29.
9-8-23: Closed at 80.92. Trade pressures are up into the neutral zone. Volumes are bullish. The next target up is 82.49 resistance.
9-16-23: Closed at 77.87. Trade pressure are down. Volumes are bearish. The next target down is 76.24.
9-23-23: Closed at 74.07. Trade pressures are down. Volumes are neutral. The next target down is 72.97.
11-17-23: Closed at 85.79. Trade pressures are up. Volumes are bullish. The next target up is 88.40.
11-26-23: Closed at 85.52. Trade pressures are up but declining. Volumes are now neutral. The next target down is 83.00.
12-3-23: Closed at 87.78. Trade pressures are up. Volumes are bullish. The next target up is 93.15
12-9-23: Closed at 92.86. Trade pressures are up. Volumes are bullish. The next target up is 97.21.
12-15-23: Closed at 102.79. Trade pressures are up. Volumes are now neutral. The next target up is 115.21, but retracement is likely to close the gap first.
12-30-23: Closed at 102.79. Trade pressures are down into the neutral zone. Volumes are bearish. The next target down is 97.66.
1-6-24: Closed at 99.79. Trade pressures are down. Volumes are bearish. The next target down is 95.72.
1-12-24: Closed at 101.32. Trade pressures are down. Volumes are bearish. The next target down is 95.72.
1-20-24: Closed at 101.09. Trade pressures are up. Volumes are bullish. The next target up is 105.18.
TopBuild Corporation
TopBuild Corporation (BLD) was a new addition to the High-Growth Investments Buy List in the December Monthly Issue. You may recall that TopBuild, like Builders FirstSource, has benefited from the recent increase in new home construction. The company is one of the top installers and distributors of installation and other building materials in North America.
The insulation market is expected to grow at a compound annual growth rate of 7.2% in the current decade and is forecast to reach $127.6 billion by 2032. Clearly, that equates to strong demand for TopBuild’s services and insulation products, especially as the new home construction market heats up in the U.S. in the wake of lower mortgage rates.
For the fourth quarter, the current consensus estimate calls for earnings of $4.63 per share on $1.29 billion in sales. That translates to 5.2% year-over-year earnings growth and 1.7% year-over-year sales growth. Analysts have also increased by 7.2% over the past two months, so a fifth-straight quarterly earnings surprise is likely. BLD is a Moderately Aggressive buy below $428.
SOM Technicals:
12-30-23: Closed at 374.26. Trade pressures are up but declining. Volumes are neutral. The next target down 361.63.
1-6-24: Closed at 351.61. Trade pressures are down. Volumes are neutral. The next target down is 337.72.
1-12-24: Closed at 365.98. Trade pressures are up. Volumes are bearish. The next target down is 337.32.
1-20-24: Closed at 373.26. Trade pressures are up. Volumes are bullish. The next target up is 382.95.