Tuesday, November 08, 2005

Toll's Stock Taking a Toll

Homebuilder Toll Brothers (NYSE: TOL) said they are cutting 2006 earnings guidance and expect to sell fewer homes in 2006 than in 2005. Toll Brothers stock was down 14% today or $5.50. The shorts were all over this one (16.58 million shares short or 12.5% of the float). Toll Brothers CEO Bob Toll said that "Since Katrina, instead of going up $5,000 or $10,000 every week or two, we have been limited to no price increases or very limited price increases."

So is this the top in housing? I really couldn't tell you, I think real estate peaked in June and is headed for some rough times of 2-5% annual appreciation. I would be moving the cash from real estate into the stock market.

Note: I am long homebuilder Lennar (NYSE: LEN) but have no position in Toll Brothers (TOL)


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