Our timing on homebuilder D.R. Horton was pretty good; after adding it to our portfolio on January 18 below $29, it ran up above $31 the following week when the company released quarterly results that beat estimates for both sales and earnings. DHI reported a 20% increase in total revenue over the previous quarter, while net income jumped 31%.

Since then DHI has fallen back near $30, but that decline appears to be mostly a technical correction that occurred on decreasing trading volume. Now priced at only 10 times forward earnings and at a PEG ratio of 1.05, there is nothing to suggest that DHI is overvalued. Also, 85% of its shares are held by institutional investors and mutual funds, leaving very little float for retail investors.

That means it may only take a little push to propel this stock up the charts. Of the 20 Wall Street analysts following the company, nearly half (9) have DHI rated a ‘hold’, yet their average one-year price target of $34.30 is 15% above its current value. Something has to give; either some of these analyst need to reduce their price targets, or they will have to upgrade DHI to a ‘buy’ after the company releases its next earnings report at the end of our three-month target holding period.