Tuesday, February 21, 2006

‘Home-Building Stocks Have Been Crunched’

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SmartMoney.com logs the toll that the housing bubble has taken on luxery home producer Toll Brothers in a story today (and then expalins why that might make them an attractive investment, unless you believe there's a housing bubble about to pop). Here's an excerpt:
WITH WALL STREET fearful about a bursting of the housing bubble, home-building stocks have been crunched — and none as hard as Toll Brothers (TOL: 30.20, +0.45, +1.5%), the country's top producer of luxury homes.
In just seven months, Toll has gone from being the Street's favorite major builder to the least-liked. Toll shares, at around 30, are down nearly 50% from their peak of 58 last July. The backdrop for builders has worsened in recent months as Toll has warned of weakening orders, rising cancellation rates and greater discounting.

Though no one knows just where the housing market may be headed, shares of Toll and its brethren seem to be anticipating the worst. The stocks all trade for just six or seven times projected 2006 profits — the lowest price/earnings ratio for any group in the stock market.

— The Boy in the Big Housing Bubble