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5 Reasons to add Toll Brothers (TOL) to Your Portfolio Now
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Despite worries of increasing chances of a series of interest rate hikes by the Federal Reserve, optimism surrounding the housing market remains largely intact.
The U.S. housing market is gradually strengthening and investors can also take advantage of near-term opportunities and cash in on any sudden surge in the homebuilding sector.
One of the major homebuilders in the run is Toll Brothers, Inc. (TOL - Free Report) . The company has exhibited considerable strength in a number of areas and makes for an attractive investment. This homebuilder engages in building single-family detached and attached home communities; master planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities principally on the land it develops and improves.
What’s Working in Favor of the Stock?
Share Price Movement: Shares of Toll Brothers gained 40.6% in the last year, outperforming 17.3% growth of the S&P 500 index as well as the 27.8% rise of the Zacks categorized Building-Residential/Commercial industry. In the last three months, the company’s shares gained nearly 20% against 13.8% growth for the industry.
Toll Brothers have been using its strong liquidity position to secure the most sought-after urban locations in the country such as New York City Market, Northern New Jersey, Washington D.C. and Philadelphia. The company’s solid land position places it well to meet growing demand in these regions, thus giving it a competitive edge over its peers who are presently facing land availability constraints.
The company’s prudent strategic initiatives should drive growth in the upcoming quarters as well.
Earnings Growth: Toll Brothers has a solid 3–5 year earnings per share growth rate of 10.61%. This earnings momentum is likely to continue in the near term, as reflected by the company’s projected EPS growth of 44% for the current year, higher than the industry average of 13.4%.
Estimate Revisions:In the last 90 days, the Zacks Consensus Estimate for Toll Brothers moved north by 2 cents to $3.15 per share for fiscal 2017. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the Zacks Rank #2 (Buy) for the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Limited Competition in the Luxury Housing Market: Toll Brothers mostly offers luxury homes and its communities are located in prosperous suburban areas with easy access to major cities. Luxury homes generally face limited competition.
The company mostly caters to luxury move-up buyers, who already possess a residence and are looking to shift to larger and better homes. These homebuyers are less sensitive to price changes. Toll Brothers enjoys greater pricing power than other homebuilding companies.
Toll Brothers achieved double-digit growth in earnings, revenues, contracts and backlog in fiscal 2016. The company was successful in ending its fiscal 2016 with the ninth consecutive quarter of year-over-year growth in contract dollars and units. In first-quarter fiscal 2017, total net signed contracts grew 14.4% year over year in dollars and 21.8% in units. All these positive readings bode well for accelerated earnings growth over the next several quarters.
Positive Housing Outlook: Homebuilding stocks continue to advance on healthy demand-supply balance, stronger economic growth, tight inventory, modest wage growth, low unemployment levels and positive consumer confidence.
The 2017 outlook for the U.S. homebuilding industry is quite compelling given improving economy, modest wage growth, low unemployment levels, positive consumer confidence and a tight supply situation.
Although rising interest and mortgage rates, tedious underwriting standards as well as land and labor shortages raise concern, a healthy supply-demand balance is expected to boost demand.
Other Stocks to Consider
Investors may also consider stocks like KB Home (KBH - Free Report) , William Lyon Homes and M/I Homes, Inc. (MHO - Free Report) , each sporting a Zacks Rank #1.
Full-year 2017 earnings for KB Home, William Lyon Homes and M/I Homes are expected to increase 43.2%, 36.8% and 36.2%, respectively.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
5 Reasons to add Toll Brothers (TOL) to Your Portfolio Now
Despite worries of increasing chances of a series of interest rate hikes by the Federal Reserve, optimism surrounding the housing market remains largely intact.
The U.S. housing market is gradually strengthening and investors can also take advantage of near-term opportunities and cash in on any sudden surge in the homebuilding sector.
One of the major homebuilders in the run is Toll Brothers, Inc. (TOL - Free Report) . The company has exhibited considerable strength in a number of areas and makes for an attractive investment. This homebuilder engages in building single-family detached and attached home communities; master planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities principally on the land it develops and improves.
What’s Working in Favor of the Stock?
Share Price Movement: Shares of Toll Brothers gained 40.6% in the last year, outperforming 17.3% growth of the S&P 500 index as well as the 27.8% rise of the Zacks categorized Building-Residential/Commercial industry. In the last three months, the company’s shares gained nearly 20% against 13.8% growth for the industry.
Toll Brothers have been using its strong liquidity position to secure the most sought-after urban locations in the country such as New York City Market, Northern New Jersey, Washington D.C. and Philadelphia. The company’s solid land position places it well to meet growing demand in these regions, thus giving it a competitive edge over its peers who are presently facing land availability constraints.
The company’s prudent strategic initiatives should drive growth in the upcoming quarters as well.
Earnings Growth: Toll Brothers has a solid 3–5 year earnings per share growth rate of 10.61%. This earnings momentum is likely to continue in the near term, as reflected by the company’s projected EPS growth of 44% for the current year, higher than the industry average of 13.4%.
Estimate Revisions: In the last 90 days, the Zacks Consensus Estimate for Toll Brothers moved north by 2 cents to $3.15 per share for fiscal 2017. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the Zacks Rank #2 (Buy) for the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Limited Competition in the Luxury Housing Market: Toll Brothers mostly offers luxury homes and its communities are located in prosperous suburban areas with easy access to major cities. Luxury homes generally face limited competition.
The company mostly caters to luxury move-up buyers, who already possess a residence and are looking to shift to larger and better homes. These homebuyers are less sensitive to price changes. Toll Brothers enjoys greater pricing power than other homebuilding companies.
Toll Brothers achieved double-digit growth in earnings, revenues, contracts and backlog in fiscal 2016. The company was successful in ending its fiscal 2016 with the ninth consecutive quarter of year-over-year growth in contract dollars and units. In first-quarter fiscal 2017, total net signed contracts grew 14.4% year over year in dollars and 21.8% in units. All these positive readings bode well for accelerated earnings growth over the next several quarters.
Positive Housing Outlook: Homebuilding stocks continue to advance on healthy demand-supply balance, stronger economic growth, tight inventory, modest wage growth, low unemployment levels and positive consumer confidence.
The 2017 outlook for the U.S. homebuilding industry is quite compelling given improving economy, modest wage growth, low unemployment levels, positive consumer confidence and a tight supply situation.
Although rising interest and mortgage rates, tedious underwriting standards as well as land and labor shortages raise concern, a healthy supply-demand balance is expected to boost demand.
Other Stocks to Consider
Investors may also consider stocks like KB Home (KBH - Free Report) , William Lyon Homes and M/I Homes, Inc. (MHO - Free Report) , each sporting a Zacks Rank #1.
Full-year 2017 earnings for KB Home, William Lyon Homes and M/I Homes are expected to increase 43.2%, 36.8% and 36.2%, respectively.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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