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KBH None

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KB Home - KBH - cls: 122.91 chg: 3.86 stop: 117.00

Company Description:
Building homes for nearly half a century, KB Home is one of America's premier homebuilders with domestic operating divisions in some of the fastest-growing regions and states: West Coast -- California; Southwest -- Arizona, Nevada and New Mexico; Central -- Colorado, Illinois, Indiana and Texas; and Southeast -- Florida, Georgia, North Carolina and South Carolina. Kaufman & Broad S.A., the Company's publicly-traded French subsidiary, is one of the largest homebuilders in France. In fiscal 2004, the Company delivered homes to 31,646 families in the United States and France. It also operates a full-service mortgage company for the convenience of its buyers. (source: company press release)

Why We Like It:
Homebuilders turned in a very strong session with the DJUSHB home construction index adding 2.99 percent. We also note that the DJUSHB index's MACD indicator just produced a new buy signal. Meanwhile shares of KBH produced a strong bounce from rising support with volume coming in well above average. KBH actually closed at a new five-week high and its technical oscillators look bullish. It is worth noting that KBH's P&F chart is currently in a sell signal. We believe that with KBH's upcoming 2-for-1 stock split on April 29th and the rebound in the sector that shares of KBH could trade to the $130.00 level. There is potential resistance near $126 but our time frame is six weeks. We would not be surprised to see KBH actually trade toward the $135 region or $67.50 on a post-split basis.

Suggested Options:
We are suggesting the May calls although readers may want to consider the July calls.

BUY CALL MAY 120.00 KBH-EV OI=1772 current ask $7.00
BUY CALL MAY 125.00 KBH-EW OI= 959 current ask $4.20
BUY CALL MAY 130.00 KBH-EX OI= 686 current ask $2.40

Picked on April 12 at $122.91
Change since picked: 0.00
Earnings Date 03/21/05 (confirmed)
Average Daily Volume = 1.4 million
 

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