Quote from scriabinop23:
The company is in default in some of its debt, the earnings are nowhere to be found, and those PE numbers are trailing. Once this company has to write down book value on excessive inventories, give real guidance as to significantly reduced future earnings, mid 20s (2003 levels) isn't unrealistic considering how this market likes to beat up anything under expectations. Remember the housing market was still booming in 2003 - so this isn't unrealistic. Also - just because its consolidated above 40 and stabilized doesn't mean we're not ready for another leg down.
Its amazing the homebuilders have done so well up to this point - its a testimony of the blind optimism the market has for these companies.
I'd like weakest of weakest sectors going forward. My bet is that we're just at the beginning of a long cycle of housing price correction. Home builders are already leading the pricing of market down with massive price drops to move inventory, which has recently been successful (according to many reports). But with increased commodity costs, increased building costs (labor, materials, land costs) there will be significantly declining margins on anything new built.
My arguments for RIMM or GOOG aren't as substantial. Therefore weaker hands.
CAL is a play on oil actually - it may be a little early though. My thought is a resurgence of oil prices will kill the rally (from 23) its had. This thing likes to run up seasonally (holidays). And rallies (goog and rimm) can't continue forever (although sometimes it seems like they do).
All of these shorts (and longs in my portfolio) boil down to one thing (for me): fundamental economic bets. I'm betting on continued commodity bull, US economic slowdown, and housing collapse.
