No surprises in today’s Daily Alert: it’s another stock leveraged to the housing recovery! While I’ve seen some analysts worry that the housing recovery trade is getting a little long in the tooth, a quick look at the numbers will tell you that almost every relevant measure of the housing market is still way below “normal” levels. In other words, things are just warming up for the homebuilders, mortgage underwriters, paint companies and other housing-related stocks we’re seeing here. Today’s recommendation is another unique play on the intersection between housing and finance. Here’s the story, from Cabot Top Ten Trader Editor Michael Cintolo.
“CoreLogic, Inc. (CLGX) can be considered the information leader for all things housing. Technically a financial services company, the firm collects and maintains the most comprehensive consumer, property and mortgage database in the U.S., Australia, New Zealand and the U.K., and has the analytics to match, helping firms analyze credit, spot fraud, evaluate renters and buyers, determine collateral risk and much more. Because of that, its customer base is amazing; the top 10 investment firms on Wall Street, top 100 mortgage lenders and every Federal government agency are all customers, along with thousands of title companies, other lenders, property appraisers and the like. Obviously, as the housing market suffered for years, so did CoreLogic, but now the sun is beginning to shine again; sales are up, led by mortgage origination services (up 30%), cash flow is booming (up 92% in the second quarter), and the future is bright. Also helping is a shareholder-friendly management; the company is set to buy back at least 10 million shares this year, bringing the float down by about 8%. Earnings are due October 24 after the market’s close.
Technical Analysis
“Like many housing-related names, CLGX bottomed in the second half of last year and has been making solid upward progress ever since. But the advance has accelerated in recent months; the stock hasn’t closed below its 25-day moving average since June! That said, CLGX has started to gyrate a little bit in recent weeks — the main trend looks great but our guess is the stock will pull in a bit, giving you an opportunity to buy on weakness with a stop around 25.
“Suggested Buy Range: 26-27. Cabot’s buy range is valid for two weeks.”
- Michael Cintolo, Cabot Top Ten Trader, October 8, 2012