TOL Just a Few Cents Away From a Breakout

by Sam Collins | December 19, 2013 1:50 am

Toll Brothers (TOL[1]) — Wednesday’s headlines trumpeted “U.S. Home Building Hits Highest Level in Nearly 6 Years.” And this major builder of luxury homes in the U.S. is geographically focused to take advantage of increased demand for upscale housing.

On Dec. 11, the company reported adjusted fiscal Q4 earnings of $0.52 per share, surpassing Zacks estimate of $0.42. Management forecasts deliveries of between 5,100 to 6,100 homes for fiscal year 2014 at an average price of $670,000 to $720,000 per home. Even with the tepid demand of the last year, TOL managed to report a profit of $0.97 per share. The company has one of the strongest balance sheets in the industry, and profits should expand as the housing market improves.

The stock has been consolidating between $30 and $35 since May, and a breakout from $35 should result in a trade to $40. TOL could also be bought by investors seeking to benefit from a rebound in the housing market that normally accompanies an economic recovery.

TOL Chart
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Chart Key[2]

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– Sam Collins, InvestorPlace Chief Technical Analyst

  1. TOL:
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  3. Beat the Bell:

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