(This is an excerpt from an article I originally published on Seeking Alpha on August 24, 2012. Click here to read the entire piece.)
{snip}
TOL reported earnings the morning of August 22nd. The tone of the conference call was bullish and the market responded by pushing TOL to fresh 5 1/2 year highs. TOL’s stock has increased around 136% since last year’s lows. TOL has gone from pricing in a new phase downward in the housing industry to pricing in a boom in less than a year. {snip}
Source: FreeStockCharts.com
TOL’s commentary during earnings calls usually provides valuable insights into the housing market, both in TOL’s niche of luxury homes and the market in general. I found the following commentary most interesting as posted in the transcript from Seeking Alpha.
Although TOL reduced guidance for community count projects from a range of 230 – 245 to 225 – 235 (due to complex local land entitlements which significantly slow down the building of new homes), TOL is overall riding the crest of “…the most sustained demand [it’s] experienced in over five years.” {snip}
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As I wrote earlier, I think it is time to hedge holdings in homebuilders as multi-year milestones get hit. Stocks throughout the industry are experiencing their strongest and longest rallies since the 2008/2009 lows as the American domestic market finally looks more attractive relative to international markets. When the correction happens, I do not expect a sharp fall, but the dip will likely be the last opportunity in a while to participate in this recovery at cheaper prices.
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on August 24, 2012. Click here to read the entire piece.)
Full disclosure: long KBH