The trend is your friend: That pretty much explains why manager Mike Arold took a new long position this week in Lennar Corp (LEN).
Arold uncharacteristically took his position ahead of this week's earnings.
His intuition was correct, as shares rose following the report. Lennar beat expectations on both earnings and revenue, with margins that rose across the board. Meanwhile, the number of homes in its backlog increased 61% year-over-year.
Many investors continue to debate whether housing has bottomed. Yet the new housing trends have improved significantly since the October 2010 trough. New housing prices are up 15% since then, according to the St. Louis Fed. And the number of new houses sold is up 27%.
Lennar shares, meanwhile, have more than doubled over that period.
Source: St. Louis Federal Reserve
Arold thinks they still may have a ways to go.
"I'm still holding it: I could see Lennar run to $34 if it manages to break out from its current consolidation," he said.