Jim:
On August 26th of
this year, in a
moment of sheer
hubris, I said that
housing would
probably bottom by
the third quarter of
2009... I even put a
date on it... June
30th. How arrogant
is that?...
Maybe you thought
that I was just
crazy but, now that
the Fed and Treasury
are trying full
throttle to get you
to buy a home...
lower mortgage
rates, home prices
have fallen 40% in
the worst-hit parts
of the country... I
think my housing
bottom, albeit a
rough one, looks
more and more right
by the day.
And, if you look at
the big rally in the
homebuilders today,
in the face of the
broad market being
down 215 points, I
think the market
agrees...
Toll Brothers (TOL),
the best house in
this admittedly
not-great
neighborhood...
reported its fiscal
fourth quarter
today, and its stock
soared 6.9%, even
though the market
was awful.
TOLL missed on
earnings. They lost
49 cents per share.
The Street was
looking for 46
cents. But nobody
looks at that stuff
anymore. They beat
on sales. That's
what mattered.
See all
of
tonight's
stocks
mentioned
on
Yahoo!
Finance,
here...
Thursday,
December 4, 2008
(Cont'd from
above)...
Jim (cont'd):
TOL generated $130
million in free cash
flow. It ended the
quarter with $9.46
per share of cash...
what a balance
sheet! I mean, this
is a $20 buck
stock!...
Plus, TOL's net
debt-to-capital
ratio - up 12.6% -
is the lowest ever
for the company.
Remember, if it were
bad, it would be the
highest ever. This
is one homebuilder
that will be able to
survive until
happier days are
here again. Best of
all, there are signs
in TOL's quarter
that we're working
our way toward a
bottom in housing...
Are these signs that
only I see, and
management doesn't?
We're going to find
out in a moment...
TOL's backlog is
down 21% from last
quarter... 47% from
last year... Again,
working through the
inventory glut...
that's the sign of a
bottom. The average
price of a contract
fell to $495,000.
Remember, TOL is a
premium
homebuilder...
That's down $84,000,
or 14.5%, from the
previous quarter...
$290,000, or 36.9%,
from a year ago...
Remember what I told
you... when it's
down 40%, you start
selling...
That's what we need
to see before
housing can
bottom...
With the TOL results
today, and the news
of (Treasury
Secretary) Paulson's
plan to slash
mortgage rates, I've
got to talk to the
man who knows
housing better than
anyone... I may know
the stocks, but I
don't know
housing... And
that's Bob Toll, the
CEO of TOL...
The last time we
heard from Bob Toll,
back on May 13th,
when his company's
stock was at
$23.27... only a
couple of points
higher than where it
is right now... and
he gave us a great
metaphor... He told
us that the light at
the end of the
housing tunnel might
be an oncoming
train!... which was
funny, and had the
added advantage of
being true...
I want to hear his
opinion again. I
want to know if,
instead of this
(sound of
trainwreck)... we've
got this ("all
aboard" sound)...
Mr. Toll, welcome
back to Mad
Money!...
The Bottom Line!:
Alright guys... I
know... I'm out on a
limb with this June
30th. You heard what
he said, which is,
it could happen
fast... I'm sticking
by it and, if you
think it is like I
think it is... you
know which one to
buy... Toll Brothers (TOL)!...
