In his Speedboat model, Covestor manager Robert Gay uses proprietary technology to create a data record for companies before he invests. He looks for companies that are accelerating rapidly and are expected to produce high returns. This week, he added two positions to the model.
The first was D.R. Horton Inc (NYSE: DHI), a company that constructs and sells town homes, condominiums and single-family houses. As we reported on September 21st, permits for new home construction increased by 1.8 percent in August and housing starts (the number of permitted homes that actually began construction) increased by 10.5 percent. This increase in actual construction is going to play a part in how well companies like DHI do this year and next since it’s not the procuring of a permit that makes profit for builders. DHI’s net revenues fell from $6.6 billion in 2008 to $3.7 billion in 2009, but their 2010 third quarter financial results show a 60 percent increase in closings year-over-year and a 51 percent increase in home building revenue compared to the same quarter of 2009.
The second position added to the Speedboat model was Supertex Inc (NASDAQ: SUPX). SUPX produces analog and mixed signal semiconductor components that can be used in flat panel displays, medical equipment and in the automotive and telecommunications industries. In July, the company introduced a new inductorless switching regulator that is more efficient in handling the varying operational modes and low voltage standby levels than traditional, inductor-based switch regulators. While we don’t know how this introduction has helped sales yet, we do know that on July 27th the company released their first fiscal quarter financial results and showed a 71 percent increase in net sales year-over-year. Their earnings per share also increased to $0.32, up substantially from $0.09 in the previous quarter.
