Toll Brothers, Inc. (TOL)

cracu2001 (95.80) Submitted: 8/05/07 10:19 PM : Start Price: $21.60 TOL Score: 28.48

Toll offers a compelling opportunity to buy a quality business at a great value. It is a luxury homebuilder that has been extremely profitable even in a difficult environment. In addition, they have a strong management team that has successfully run the business for decades, have a very strong balance sheet, and are positioned for growth. They should benefit from a surge in demand from baby-boomers who look to move into their retirement homes. Their customer base is primarily wealthy "empty-nesters" who are less price sensitive. Mortgage rates are still reasonably low and very low expectations are priced into the stock. Price to Book is currently at 1.0 and P/E (ttm) at 8.0. It has little exposure to subprime and should not suffer from write-offs. With earnings expected to continue to decline drastically, the stock could surge once the housing market stabilizes.

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