The shares of this construction company were just upgraded at RBC Capital to ‘Outperform.’
Skyline Champion Corporation (SKY)
From FMA Trader Alert
Skyline Champion is a factory-built housing company in North America. The company offers a portfolio of manufactured and modular homes, park model RVs, accessory dwelling units (ADUs) and modular buildings for the multi-family, hospitality, senior and workforce housing sectors. It designs and builds a range of manufactured and modular homes, park model RVs, ADUs and commercial structures.
It builds homes under brand names in the factory-built housing industry including Skyline Homes, Champion Home Builders, Genesis Homes, Athens Park Models, Dutch Housing, Excel Homes, Homes of Merit, New Era, Redman Homes, ScotBilt Homes, Shore Park, Silvercrest and Titan Homes in the United States and Moduline and SRI Homes in western Canada. Basically, anywhere you look and see manufactured homes, it’s a good bet Skyline is involved.
Last week, Skyline reported a huge earnings beat, coming in with earnings per share (EPS) of $1.18, well above estimates for just $0.78 per share. That’s a year-over-year growth in EPS of 211%. Moreover, over the past three years, the company has posted annual EPS growth of 42%. The combined earnings growth puts this company in the top 1% in terms of EPS performance.
That strong earnings showing has lifted SKY shares about 7.8% over the past five trading sessions, as the fast money races to be part of the stock. Yet over the past 52 weeks, SKY also has shown its relative strength mettle with a gain of some 77.3%. That gain is in the top 4% of all companies in terms of relative price performance.
Technically speaking, SKY has come roaring back off the late-January lows, as the stock got sold off along with the rest of the market. Yet since then, shares are up big, and we’ve now seen SKY recapture its 50-day moving average. In fact, it is the nice move higher in today’s session that gave us the green light to jump into SKY.
So, let’s buy Skyline Champion Corp.at market, with a protective stop at $58.70.
For those willing to make a bigger bet, we recommend the SKY May $80.00 call options (SKY220520C00080000), which last traded for $5.12 and that expire on May 20.
So, if you want more profits where “the sky’s the limit,” then get yourself into SKY and its corresponding calls.
Mark Skousen & Jim Woods, FMA Trader Alert, markskousen.com, Eagle Financial, 300 New Jersey Ave. NW, Suite 500, Washington, D.C. 20001, February 7, 2022