Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

D.R. Horton, Inc. (DHI), Toll Brothers Inc (TOL): Are These Housing Stocks Good Investments After the Liquidity Crunch?

Toll Brothers – old is gold, and gold is good

Toll Brothers Inc (NYSE:TOL) is another stock that has been hammered recently. Having lost 14 percent over the last 30 days, the stock currently trades at a price to earnings ratio of 11. In the most recent quarter, Toll Brothers Inc (NYSE:TOL)’s sales grew 38.1% to $516 million, while profits surged 46.2% to $24.7 million, up from $16.9 million in the same period last year. Through its greater exposure to luxury housing, Toll Brothers Inc (NYSE:TOL) stands at a somewhat higher perch than its competitors in terms of getting affected by the moves of Federal Reserve. Analysts are also upbeat about its prospects, which are reflected in target prices of $42 and $39 from Argus and MKM Partners, respectively. This compares to the current price of $31.50, and indicates substantial upside.

Foolish bottom line

It was not that the idea of the Fed slowing on its expansionary plans came out of nowhere. There have been ample indications that the economic steroids will be gradually phased out, but the market was in no mood to listen. Given the circumstances, this may be a blessing in disguise for investors looking to get into solid housing plays such as Toll Brothers Inc (NYSE:TOL).

The article Are These Housing Stocks Good Investments After the Liquidity Crunch? originally appeared on and is written by Jacob Wolinsky.

Jacob Wolinsky has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Jacob is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.