Looks like it's possible to make bucks building homes:
Briefing - TOLL BROTHERS (TOL) 19 15/16. How about a stock that has 25% compound annual growth in revenue and profits the past five years, and trades at 8.8 times trailing earnings, while the CEO forecasts another record year ahead? That is the situation for Toll Brothers (TOL), a builder of luxury homes. Before the open Wednesday, TOL reported fiscal first quarter (Jan) earnings of $0.46 per share, in line with Wall Street expectations, and up from the year earlier $0.44 per share profit. Revenues rose 12%. Just another solid performance for this unappreciated company. The CEO in the press release also notes that 1999 should be another record year, as the value of the backlog of homes at the end of January was up 28% from the year ago level. TOL continues to do well due to the excellent conditions for the high end housing market. Interest rates are low, the economy strong, and the market for luxury items is good, even for homes. And the market isn't going away - homes aren't going to be replaced by any new technology (at least soon). Yet, the stock price has been on a downward slope. TOL was at 30 a year ago, and has drifted steadily lower the past 12 months. The market simply doesn't value these stocks very highly, or it is expected that growth will slow for whatever reason. In any case, until TOL opens a web site of some kind, it looks like its steady growth and very reasonable valuation won't make it a market favorite. The stock has had good value for a while, and little interest, so there isn't much reason to expect today's report to generate any new interest. It is a sign of the times that so much profit with good prospects can be had so cheaply here, while dreams sell so expensively in other sectors of the markets. |
