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Homebuilder on the Verge of a Double-Top Breakout

TOL's volume is accumulating and MACD just issued a buy signal


Toll Brothers (NYSE:TOL) — This major U.S. luxury homebuilder is geographically focused to take advantage of a housing turn and caters to “move-up” buyers, empty nesters and active adults.

Even with the tepid demand last year, the company had a 59% increase in the value of contracts signed in fiscal year (FY) 2012, ended in October, compared to FY 2011. On Wednesday, the company reported fiscal Q2 earnings of $0.14, which beat analysts’ estimates by $0.07.

The Commerce Department reported Thursday that the average new-home price in April increased to $330,800 — a record high. It also noted a 29% year-over-year increase in sales and that buyer demand was high. TOL could do well in a housing market with increasing prices and higher demand.

TOL has been consolidating between $30 and $38 for almost one year. But higher volume is accumulating, and MACD just issued a buy signal, increasing the chances of a double-top breakout. The trading target for TOL is $46, but holding this stock longer term could result in a very high return.

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