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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 Fool.com 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.

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