Generally, investors should focus on companies with a track
record of profitability. Also, don't overlook turnarounds, which
can go on to be big winners.
One such issue that has recently turned profitable isMDC
), which builds homes under the Richmond American Homes label.
The Denver-based company lost money from 2007 to 2011, but turned
a profit of $1.28 a share last year.
MDC got off to a strong start in 2013. The company this month
announced a first-quarter profit of 45 cents a share, up sharply
from 4 cents a share in the year-ago period. Sales jumped 77% to
$344.3 million -- the best in years. The gain also marked the
fourth straight period of acceleration.
During the quarter, MDC delivered 1,018 new homes, up 64% from
a year ago. Its backlog grew 30% to 1,927 homes.
Analysts polled by Thomson Reuters see its full-year earnings
rising 73% to $2.22 a share. The estimate was recently revised
MDC pays a dividend of $1 a share, which works out to a yield
of 2.6%. But the company already paid out its 2013 dividend in
The firm has the highest yield among the domestic companies in
the Building-Residential/Commercial group. Only China'sXinyuan
Real Estate (
) offers a higher yield.
While MDC looks like it's still in a base, investors can also
view the stock as double-bottom pattern. Sometimes there are
different interpretations of price action.
The stock has yet to clear the standard middle-peak buy point
But MDC took out a Shakeout + 3 entry at 38.78 on April 29.
Although volume wasn't great that day, volume kicked in May 2.
Shares have rallied higher since.