Tag Archives: Toll Brothers

9 Homebuilders That Soared This Week

By Rick Munarriz, The Motley Fool

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One of the hottest sectors this past week was housing. Things certainly didn’t start out that way. One of the industry’s bellwethers posted disappointing quarterly results on Monday with revenue and earnings growth falling well short of analyst expectations.

But investors hungry for a second opinion got substantially better news when D.R. Horton — the country’s largest homebuilder — posted blowout quarterly results. Revenue soared 49%, and profitability skyrocketed 173% higher.

Most indications point to a speculative market in which potential homebuyers are rushing to lock in home prices before they head even higher. The National Association of Realtors reports that the average home is on the market for just 62 days, an entire month shorter than the average of 91 days a year earlier. The association also reported that home prices rose 11.8% last month, and that’s the largest year-over-year increase since 2005.

This has all of the makings of another housing bubble, but investors didn’t care. They dove into the residential property developers last week, with several companies cranking out double-digit percentage gains.

Company

April 26

Weekly Gain

D.R. Horton

$26.66

21%

PulteGroup

$21.35

19%

Meritage Home

$49.26

19%

M/I Homes

$25.10

18%

Hovnanian Enterprises

$5.67

15%

KB Home

$23.04

13%

M.D.C. Holdings

$38.18

13%

Toll Brothers

$34.69

12%

Lennar

$42.30

11%

Source: Barron’s.

We’re not just talking about a week of gains here. Pulte , KB Home , and Hovnanian more than doubled last year. Hovnanian saw its stock soar 363% in 2012!

It probably isn’t a surprise to see luxury homebuilder Toll Brothers doing so well in this climate. High-end retailers have held up surprisingly well at this stage of the economic turnaround, so it’s not a shock to see the affluent taking advantage of historically low rates to jump on freshly constructed properties. However, Pulte, KB Home, Hovnanian, and D.R. Horton cater to mainstream homebuyers merely looking for a place to call their own after years of renting.

It may not get any easier from here, but investors probably felt that way at the end of last year. Hovnanian has given up some of last year’s gains, but most of the other developers have only padded their already impressive 2012 returns. KB Home is already trading 46% higher in 2013 after more than doubling last year.

The pent-up demand is there for new homes, but investors should be looking out for any signs that the bubble will burst. The last thing they want is to be smack-dab in the middle of a sudsy mess.

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Source: FULL ARTICLE at DailyFinance

How the Obama Budget Would Change Your Taxes

By Dan Caplinger, The Motley Fool

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President Obama released his budget proposal yesterday, and as expected, it included a number of new provisions that would dramatically change the tax laws once more, with impacts on taxpayers up and down the income scale. The Obama proposal comes as a clear disappointment to anyone who believed that the resolution to the fiscal cliff crisis at the beginning of the year would prove to be the last word on the tax front, but for those who want to see further revenue increases as part of a broader solution to address the national debt, the budget’s tax provisions address some of their concerns.

Let’s take a look at some of the budget’s most important tax proposals and the impact they could have on both individual and corporate taxpayers, as well as the businesses that serve them.

Limited tax savings for itemized deductions and municipal-bond interest
The biggest revenue-raising part of the Obama budget would limit the value of itemized deductions, including the mortgage interest deduction, to 28%. That would impact only high-income taxpayers above the $200,000 and $250,000 income thresholds for single and joint filers, respectively, costing them as much as 11.6 percentage points in tax savings. Because of the high-end focus, the impact on industries like the homebuilding sector that benefit from customers taking advantage of those deductions would be limited, with luxury-oriented companies Toll Brothers and Ryland more at risk than homebuilders aimed at lower price points.

Implementing the Buffett Rule
The budget also wants to ensure that those with taxable income above the $1 million mark pay an effective tax rate of 30%. The mechanics of implementing what’s become known as the Buffett Rule would include a phase-in of the tax for incomes between $1 million and $2 million, representing a further increase for those highest-income taxpayers with extensive deductions other than charitable contributions.

Lower inflation adjustments for tax-related provisions
The same proposal to link Social Security benefits to the chained Consumer Price Index would also have an impact on taxes. The budget would use the chained CPI to adjust tax brackets, personal exemptions, and standard deductions, leading to slower increases in those figures going forward. Unlike the limits on itemized deductions, the inflation adjustment provisions would affect all taxpayers.

Maximum amounts in IRAs and other retirement accounts
The budget would limit IRA, 401(k), and other tax-favored retirement balances to about $3 million. Combined with increases on carried-interest tax rates, this provision would capture hedge-fund managers and other investors who’ve used retirement accounts as successful high-growth investing vehicles.

A new cigarette tax
The Obama budget would hike federal taxes on cigarettes by $0.94 per pack. Altria and other cigarette manufacturers would inevitably get hurt by such an increase, as it would add yet another impediment to cigarette demand that has already been falling sharply for decades.

Lower estate tax exemptions
The budget

From: http://www.dailyfinance.com/2013/04/11/how-the-obama-budget-would-change-your-taxes/

Home Prices Send Stocks Higher Despite Other Ominous Signs

By John Maxfield, The Motley Fool

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Blue-chip stocks are considerably higher today after data showed that home prices are continuing their upward ascent. According to Standard & Poor’s Case-Shiller home price index, prices increased in January by 8.1% on a year-over-year basis. Economists polled by Thomson Reuters had forecast a rise of 7.9%. On the heels of this, the Dow Jones Industrial Average is up by 92 points, or 0.64%, with roughly an hour left in the trading session.

The news about home prices came amid a flurry of economic reports. Data released from the Department of Commerce today also showed that sales of new homes fell 4.6% last month to a seasonally adjusted 411,000. Economists had predicted a rate of 415,000. And in the same report, the number of new homes listed for sale increased to 152,000 at the end of February. That is the highest figure since 2011.

Shares of homebuilders are nevertheless lower. While prices are up, this is likely a reflection of the slight miss on new-home sales. Hovnanian is faring the worst, down 3% at the time of writing, followed by PulteGroup, KB Homes, and Toll Brothers, all of which are off by less than 1%.

Separately, a press release from the Conference Board, a private research group, suggests that confidence among U.S. consumers is waning. The firm’s consumer sentiment index declined to 59.7 in March, down from a revised reading of 68 in February. Economists surveyed by Bloomberg had forecast a reading of 67.5.

According to Lynn Franco, the group’s director of economic indicators: “The loss of confidence, particularly expectations, mirrors the losses experienced this past December and January. The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident.”

Needless to say, the news isn’t helping the Dow’s largest retail stock, Wal-Mart , which is down by 0.2% in afternoon trading. Paradoxically, however, as my colleague Morgan Housel has noted, there seems to be a loose inverse relationship between the strength of the overall economy and Wal-Mart’s same-store sales. If things continue to deteriorate, in turn, that could actually bode well for the retail giant.

Finally, orders for durable goods rose 5.7% last month. This was the highest level since September, and it follows a 3.8% drop the prior month, according to the Department of Commerce. As my colleague Dan Dzombak noted, there was particular strength in the transportation market, particularly with regard to aircraft, “where new orders jumped by 22%.”

With this in mind, it should be no surprise that shares of Boeing are soaring today. Additionally, as fellow Fool Dan Carroll observed, the aerospace company’s flagship 787 Dreamliner successfully completed a two-hour test flight to assess changes made to its battery. The state-of-the-art plane has been grounded since experiencing trouble with the batteries earlier this year.

Want to learn more about Boeing?
Boeing is a major player in a multitrillion-dollar market in which the opportunities are …read more
Source: FULL ARTICLE at DailyFinance

Why Buffett's Favorite Stock Is Leading the Dow Today

By John Maxfield, The Motley Fool

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Blue-chip stocks are down today as investors and analysts weigh good news from the domestic housing sector against the ongoing economic drama in the Mediterranean. With roughly an hour remaining in the trading session, the Dow Jones Industrial Average is off by 26 points, or 0.18%.

The biggest news since the weekend is that the Mediterranean nation of Cyprus is on the verge of levying a tax against bank deposits. On Sunday the country added its name to a growing list of European countries bailed out by the Eurozone and the International Monetary Fund. To fulfill its side of the 10 billion euro bailout bargain, however, Cyprus must come up with 5.8 billion euros in new revenue. And for this, it’s looking to its banking sector, long known as a haven for international riches — particularly of the Russian variety. The fear is that other countries will follow suit, thereby prompting funds to flee the continent.

On the other side of the equation, fueling bullish sentiments today was a positive report on the domestic housing market. According to data released this morning by the Department of Commerce, housing starts climbed 0.8% last month to an annualized pace of 917,000. Economists surveyed by Bloomberg had projected a figure of 915,000. Meanwhile, building permits rose by 4.6% to a rate of 946,000 — the highest level since June of 2008. This beat economists’ expectations for a 925,000 figure.

“Home building continues to recover and add to the recovery,” an economist at PNC Financial told Reuters. He went on to note that the rise in permits suggests that “we will have a solid spring.” A California-based homebuilder echoed this confidence in an interview with Bloomberg, saying: “We see a lot of positive signs out there. All the numbers were positives going into the year, and again, we have a favorable outlook for the year.”

With the latter news in mind, it’s no surprise that stocks of homebuilders are rallying today. Among others, Hovnanian Enterprises is up by 3%, Toll Brothers has gained 0.7%, and KB Home is up 1.9%. But as my colleague Dan Caplinger said earlier of Hovnanian: “At some point the homebuilder will need to start working its way back to profitability amid better conditions. Otherwise, investors will conclude that the stock has gotten ahead of itself, and it will give up some of its huge recent gains.”

In terms of Dow stocks, the best-performing component on the blue-chip index today is none other than Warren Buffett‘s favorite: Coca-Cola , in which his company Berkshire Hathaway holds a nearly 9% stake. Paradoxically, the impetus for Coke’s climb may be Cyprus. As one of the soundest and most stable companies in the world — Buffett famously claims that even a monkey could run it — Coke is seen as a classic defensive stock. When things are bad, in turn, investors have a tendency to move in its direction. …read more
Source: FULL ARTICLE at DailyFinance

KB Home Looks Buyable As Builders Take A Breather

By Schaeffer’s Investment Research, Contributor

Shares of KB Home (KBH) have advanced almost 14% in 2013, more than twice the year-to-date gain of the S&P 500 Index and SPDR S&P 500 (SPY) ETF that tracks it.  In fact, since October 2011, several names like Lennar, Toll Brothers, D.R. Horton–as well as the ITB and XHB ETFs that track the builders–have all dramatically outperformed the broader market. …read more
Source: FULL ARTICLE at Forbes Latest