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Building Mat. - BMHC - cls: 86.09 chg: +1.09 stop: 83.49

Company Description:
BMHC, a Fortune 1000 company, is one of the largest providers of residential construction services and building materials in the United States. We serve the homebuilding industry through two subsidiaries: BMC West distributes building materials and manufactures building components for professional builders and contractors in the western and southern states; BMC Construction provides construction services to high-volume production homebuilders in key growth markets across the country. (source: company press release or website)

Why We Like It:
We like BMHC as a technical play and the stock looks poised to breakout over resistance at its simple 50-dma. We realize that some investors would question going long a materials supplier to the homebuilders when the homebuilders are moving into their seasonally slow period (a.k.a. winter). However, BMHC services the southern states and will probably benefit from the hurricane rebuilding process. We do admit that the daily chart shows a bearish double-top pattern with resistance at the $100 level. Yet the Point & Figure chart is very bullish with a $115 target. We are going to suggest a trigger at $87.55 since the $87.50 level looks like short-term resistance. If we are triggered we'll target a move into the $98-99 range.

Suggested Options:
We are suggesting the December calls. Our trigger is $87.55.

BUY CALL DEC 85.00 BGU-LQ open interest= 560 current ask $7.30
BUY CALL DEC 90.00 BGU-LR open interest= 428 current ask $4.90
BUY CALL DEC 95.00 BGU-LS open interest= 585 current ask $3.20

Picked on November xx at $ xx.xx <-- see Trigger
Change since picked: + 0.00
Earnings Date 10/25/05 (confirmed)
Average Daily Volume = 536 thousand
 

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