TOL ==> The Summer Solstice Winner

[New-born baby]

Short Tol

Tol looks interesting to me around 24-18 range

If I understand you, Runner, you are saying that TOL looks like a good short down from $24 to $18 or so. Is this correct?

[Runner]

NB, Tol was the best short off that top that this forum has mentioned a good while ago. I was thinking 18-24 areas might offer entry on the long side off possible support. Now if we do roll into a bear market she could drop much farther. It has come down a lot and I think better shorts are going to set up soon. I would leave it alone on the short side IMO.

[Runner]

Here is a monthly chart and weekly on TOL trying to support my thinking. Please jump in and correct my thought process.

Monthly longer-term trend is in tact from 1990. Notice the increase or acceleration in trend. Must have been when all homies were doing well. Note nice reversal off top as price could not hold highs.

Weekly chart supports my theory best I think. I feel support looks somewhat strong here and may be worth grabbing a few shares long with stop under base or support. According to MM this company is cheap and earning are strong. Not to say it can’t become cheaper, but this is my longer-term plan. Looking over the sector chart I notice a little bump taking place.

[Jack Haddad]

Here is a monthly chart and weekly on TOL trying to support my thinking. Please jump in and correct my thought process.

Monthly longer-term trend is in tact from 1990. Notice the increase or acceleration in trend. Must have been when all homies were doing well. Note nice reversal off top as price could not hold highs.

Weekly chart supports my theory best I think. I feel support looks somewhat strong here and may be worth grabbing a few shares long with stop under base or support. According to MM this company is cheap and earning are strong. Not to say it can’t become cheaper, but this is my longer-term plan. Looking over the sector chart I notice a little bump taking place.

While much of the reduced estimates in revenues, earnings, and gross margins have been priced in shares of home builder stocks (some have been sliced in half from their 52 week high), It's important to realize how off-balance sheet joint venture forms have and continue to assis stocks like TOL and HOV.

Home builder stocks benefit from these JVs by by accessing lot positions, expanding market opportunities, establishing strategic alliances, managing risk profiles, and leveraging capita bae to enhance returns on capital. HOV, for example, reported 1st quarter results which included 9.5 million of income from unconsolidated JVs. Now, while this collected amount seems minute to the company's 1.57 billion in revenue, it's a nice piece of of HOV's 160 million to 165 million of income before taxes. So, HOV added about 9 to 10 cents to its 1.55/share after tax-adjusting the JVs income. That is not bad at all!

Similarly, TOL partnered with a joint venture in Hoboken, NJ. which is converting apartments into condos and in another development which is building luxury condos in Brooklyn.

[Jack Haddad]

Here is a monthly chart and weekly on TOL trying to support my thinking. Please jump in and correct my thought process.

Monthly longer-term trend is in tact from 1990. Notice the increase or acceleration in trend. Must have been when all homies were doing well. Note nice reversal off top as price could not hold highs.

Weekly chart supports my theory best I think. I feel support looks somewhat strong here and may be worth grabbing a few shares long with stop under base or support. According to MM this company is cheap and earning are strong. Not to say it can’t become cheaper, but this is my longer-term plan. Looking over the sector chart I notice a little bump taking place.

While much of the reduced estimates in revenues, earnings, and gross margins have been priced in shares of home builder stocks (some have been sliced in half from their 52 week high), It's important to realize how off-balance sheet joint venture forms have and continue to assis stocks like TOL and HOV.

Home builder stocks benefit from these JVs by by accessing lot positions, expanding market opportunities, establishing strategic alliances, managing risk profiles, and leveraging capita bae to enhance returns on capital. HOV, for example, reported 1st quarter results which included 9.5 million of income from unconsolidated JVs. Now, while this collected amount seems minute to the company's 1.57 billion in revenue, it's a nice piece of of HOV's 160 million to 165 million of income before taxes. So, HOV added about 9 to 10 cents to its 1.55/share after tax-adjusting the JVs income. That is not bad at all!

Similarly, TOL partnered with a joint venture in Hoboken, NJ. which is converting apartments into condos and in another development which is building luxury condos in Brooklyn.

[DSteckler]

Blah blah, blah blah, blah blah <VBG>.

The trend is lower until TOL starts making higher highs. Looks to me like it's in Wave 3 down on the weekly chart.

[New-born baby]

Blah blah, blah blah, blah blah <VBG>.

The trend is lower until TOL starts making higher highs. Looks to me like it's in Wave 3 down on the weekly chart.

Said with perfect tact and verity. <vbg>
Yeah, I'm not in love with TOL. Interest rates moving higher--how is that supposed to help housing and autos? Support is support until it ain't--but I believe it ain't. Do you know why? Because all these stocks in an uptrend that suddenly get real hot, and the uptrend moves up even higher, just like on the chart that Runner drew--well, when that new, steeper uptrend busts, the whole uptrend has in effect busted. It may take a while, like in TOL's case, to return to the initial trendline, but the support for the old trend is gone because that isn't support anymore. It was the new, steeper trendline, and that dog died months ago.

Just my ten cent observations . . . .

[Jack Haddad]

Tol

Said with perfect tact and verity. <vbg>
Yeah, I'm not in love with TOL. Interest rates moving higher--how is that supposed to help housing and autos? Support is support until it ain't--but I believe it ain't. Do you know why? Because all these stocks in an uptrend that suddenly get real hot, and the uptrend moves up even higher, just like on the chart that Runner drew--well, when that new, steeper uptrend busts, the whole uptrend has in effect busted. It may take a while, like in TOL's case, to return to the initial trendline, but the support for the old trend is gone because that isn't support anymore. It was the new, steeper trendline, and that dog died months ago.

Just my ten cent observations . . . .

The low valuation could spark acquisitions in the industry. When asked by an analyst whether the home builder would consider a buyout bid from management, Toll said he would. While management could have done it when shares were lower, he said they didn't because it meant they would have to take on considerable debt, which is risky. In the meantime, Toll Brothers is considering a small acquisition in the Northeast, he said.

[Runner]

Here is a monthly chart and weekly on TOL trying to support my thinking. Please jump in and correct my thought process.

Monthly longer-term trend is in tact from 1990. Notice the increase or acceleration in trend. Must have been when all homies were doing well. Note nice reversal off top as price could not hold highs.

Weekly chart supports my theory best I think. I feel support looks somewhat strong here and may be worth grabbing a few shares long with stop under base or support. According to MM this company is cheap and earning are strong. Not to say it can’t become cheaper, but this is my longer-term plan. Looking over the sector chart I notice a little bump taking place.

[New-born baby]

Target

Runner:
What is your target?

[spikefader]

Some thoughts: See charts.

Also there's a monthly 'c' resistance at 28.70, which it penetrated bullishly on Friday, and there's also an intraday fuzzy 'c' around 28.70 too. I'd be full on bullish while price is above that mark.






PS. I actually posted THIS at my site on Monday about TOL. It hit close to +8% in 4 days.

[Runner]

NB, I’m expecting a retest of the 26 area and then another bump up. I think next upward test is Resistance around 29.36. I’d like to see a successful retest in the 26 area before busting resistance. If or when it takes out the 29.36 area I think next target would be in the 35 range. I would not suggest opening new positions here. I'm bull TOL down to 25.00.

[Runner]

[mrmarket]

Up 27% in the last 3 months..have we found a bottom here?

[mrmarket]

TOL has lots of cash

Toll Brothers Sits Atop A Comfy Cash Cushion
May 15, 2008 | By Glenn CurtisThe housing market's collapse has taken its toll on luxury homebuilder Toll Brothers (NYSE:TOL). Revenue in the latest quarter dropped 30% from last year, and its sales backlog is about half of what it was one year ago. This is all bad news, but it was also expected bad news. The homebuilder's substantial cash position, on the other hand, came as a surprise and could give the company some much-needed flexibility in the months ahead.



Let's dive into the numbers to discover if there is any hope in all this mess. (To learn the difference between a company that can survive a share-price beating and one that can't, read Finding Profit In Troubled Stocks.)

Revenue, Backlog Dwindling
On Tuesday morning, the Pennsylvania-based company announced that second-quarter home building revenue came in at about $817.9 million. That's a roughly 30% drop from the $1.17 billion it reported in the comparable period last year.

Toll Brothers' backlog at the end of the period was approximately $2.08 billion. That's about 50% lower than the $4.15 billion it reported in Q2 last year, and a sequential decrease from the backlog at the end of Q1 which was $2.4 billion.

In short, this sales slump is a problem because it means Toll Brothers will have less leverage over fixed expenses. The shrinking backlog indicates that revenue in the near-term will continue to lag.

Analysts who were looking to do a little bottom fishing were no doubt hoping to see a real improvement. These numbers don't provide that, so it's unlikely we will see any whole-hearted recommendations. Frankly, unless a turnaround in those metrics occurs, I think that the analyst community will remain lukewarm.

Billion Dollar Cushion
The one thing that stands out to me about Toll Brothers preliminary Q2 numbers is its cash position, which stands at approximately $1.23 billion By my calculation that equates to about $7.79 per share (based on 157.8 million shares), which should help limit the downside to the stock.

Another positive is that this cash, coupled with the roughly $1.2 billion it reported to have available under its bank credit facility could be used to scoop up land on the cheap. This might not have a big near-term impact on earnings, but it should pay off handsomely down the road. (To learn more about cash the pros and cons of cash, read Cash-22: Is It Bad To Have Too Much Of A Good Thing? and Analyze Cash Flow The Easy Way.)

Toll Brothers' cash position is also attractive when compared to rival Hovnanian (NYSE:HOV) and D.R. Horton (NYSEHI). Hovnanian sported about $73 million (roughly $1.17 in cash per share) on its balance sheet, according to Yahoo Finance. Well-known homebuilder D.R. Horton has $519 million ($1.65 per share) in cash on its balance sheet. Although, it should be noted that Hovnanian recently announced a stock offering, and we are awaiting a full Q2 balance sheet with updated information.

Three Concerns before Buying in
Toll Brothers isn't out of the woods yet. There are three macroeconomic factors that investors should consider before they get too excited about the story.

There is still a glut of homes for sale in many areas of the country, particularly the East Coast where Toll Brothers has a large presence.
Many homebuilders are offering promotions this means that Toll Brothers may have to lower its prices to keep pace.
Finally, Toll's houses routinely sell for $500,000 or more, and the lending environment for jumbo mortgages is difficult.
This is a nasty trifecta that could put a damper on sales.

Bottom Line
Toll Brothers' preliminary sales and backlog numbers were disappointing, but this news was softened by its substantial cash cushion. We could see Toll Brothers purchase land at a low cost, which will eventually pay off. I think its access to the green stuff is also attractive when compared to some other major homebuilders.

Toll Brothers will reveal its final results on June 3. Hopefully, it will also give some guidance about the remainder of the year. Stay tuned.