Toll Brothers (TOL) — On Wednesday, headlines trumpeted, “New Home Sales Surge 18.6% in May,” which is obviously good news for this luxury homebuilder. The company is positioned to take advantage of an increase in demand for houses priced at $500,000-plus.
S&P raised its price target to $42, and it expects earnings for fiscal 2014, ending in October, of $1.62 per share and $2.28 in fiscal 2015.
TOL is trading within the bounds of a right triangle with support at its 50-day and 200-day moving averages at about $35. A break through the bearish resistance line at $37.50 should propel the stock to a new high of $41. Note that MACD is very close to a buy signal.
Long-term investors may want to purchase TOL for participation in the housing market recovery.