May 21 2008
NVR: Reason to be VERY Bearish
I came across NVR this morning while flipping through some stock charts. As you can see by the daily below, it’s recently broken down below $600 area support.
OK, that’s not a huge deal. Sure, we could be looking atÂ about a 10%Â drop down to the $520 support area from the March lows. Could be a decent swing trade short.
Here’s the really interesting part, though. The stock has traded at a PE of between 3 and 11 on a trailing basis over the last five years. Right now the trailing PE is about 8. On a forward basis, though, that PE is more like 15. That’s because estimates for earnings this year are in the $30s. In order for NVR to beÂ stay within that PE range, it would have fall to about $400 by year-end.
This would be an awesome put play situation. Unfortunately, there aren’t any options on NVR so you can make that trade. You’d have to do a straight short.
Here are some other posts which might interest you:
- USD/JPY: Shifting My Forex Positions a Bit
- Trimmed My EUR/JPY Position a Bit
- Sometimes Even Good Trading Results Need to be Rethought
- Today’s Trading Look-Back – March 11, 2008
- Aussie, Gold, and Stocks