Is It Too Late to Buy Surging Homebuilders?
“We are currently experiencing the strongest housing market I have seen in my 30 years at Toll Brothers, and we continue to increase prices in nearly all of our communities.” --Douglas Yearley, CEO of Toll Brothers
The pandemic and all of its associated restrictions have produced an unlikely boom in housing. But maybe we should have expected it -- with the surge in online and remote work, and with corporations moving quickly to expand digital infrastructure, many Americans can now work from anywhere. In many cases, that has meant migrating out of major U.S. cities and relocating into more rural areas, where people can afford homes with office space.
According to Toll Brothers last earnings report, the number of contracts for new homes increased 68% to 3,407 units from last year, and the contract value rose 63% to $2.74 billion. The momentum is poised to continue: Toll’s home-building deliveries rose 10% from a year ago to 2,940, and the company expects around 1,675 home deliveries in the first quarter with an average price between $780,000 and $800,000.
With the pandemic still raging and many companies extending work-remote capabilities, the migration out of cities and into rural areas with homes may just be getting started. Companies like Toll Brothers, Pulte Homes, and KB Homes may stand to benefit.
TOL sees MACD Histogram just turned negative
TOL saw its Moving Average Convergence Divergence Histogram (MACD) turn negative on December 05, 2024. This is a bearish signal that suggests the stock could decline going forward. Tickeron's A.I.dvisor looked at 55 instances where the indicator turned negative. In of the 55 cases the stock moved lower in the days that followed. This puts the odds of a downward move at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for TOL moved out of overbought territory on November 26, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 46 similar instances where the indicator moved out of overbought territory. In of the 46 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on December 09, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on TOL as a result. In of 90 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where TOL declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
TOL broke above its upper Bollinger Band on November 25, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.
TOL moved above its 50-day moving average on November 05, 2024 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for TOL crossed bullishly above the 50-day moving average on November 06, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 14 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where TOL advanced for three days, in of 330 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 366 cases where TOL Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 56, placing this stock better than average.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. TOL’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.900) is normal, around the industry mean (7.196). P/E Ratio (9.918) is within average values for comparable stocks, (103.177). Projected Growth (PEG Ratio) (1.006) is also within normal values, averaging (1.437). TOL has a moderately low Dividend Yield (0.007) as compared to the industry average of (0.044). P/S Ratio (1.380) is also within normal values, averaging (88.859).
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General Information
a designer of single family homes
Industry Homebuilding