Hovnanian Enterprises (HOV) - 351% Gain in 8 Months
This is a trade rationale from a past trade for educational purposes only. For access to our current portfolio subscribe today!
We added HOV to the portfolio in July 2020 at a price of $23.51. The stock met our valuation and market cap criteria, and was among the top 50 micro cap stocks outperforming the S&P 500 over the previous 12 months.
The stock bottomed in March 2020 on high volume and proceeded to consolidate for several weeks, during which there were signs of high volume accumulation as the stock drifted higher. The stock finally broke above long term resistance on high volume, qualifying it for addition to our portfolio.
We removed the stock from the portfolio in March 2021 at a price of $106, for a gain of 351%, as the company exceeded the market cap limit for the portfolio.
Nearly three years later, the stock is trading for 32% less than what we sold it for. The benefit of a rules-based approach is having clear guidelines on when to buy and sell, a critical requirement for building wealth in the stock market.
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