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Toll Brothers Spending Lots on Lots


Let's hope the company is confident it can sell them all.


Asian stocks took a bit of a hit overnight. The Hang Seng and the Nikkei were off 0.75% and 1.48%, respectfully. European stocks, however, were mixed early this morning. And here in the US, we're currently trading higher.

Here's what I'm seeing today:

Toll Brothers (TOL):
The high-end homebuilder was out with its first-quarter release. In short, the company posted a loss of $0.25 and saw its revenue tank 20% from last year. But there was a bright spot or two, including this in the release:

Douglas C. Yearley, Jr., executive vice president, stated: "We continue to review numerous land opportunities. Since November 1, 2009, the start of our new fiscal year, we have stepped up our purchases, acquiring or placing under control approximately 3,000 lots via mortgage note purchases and direct acquisitions from financial institutions, builders and land developers. With more finished-lot land deals among those being offered for sale, if our pace of acquisitions accelerates, our year-end community count could prove higher than the 200 to 210 currently projected. With experienced land teams in nearly all our markets, a strong cash position and low leverage, we have the capital and ability to respond to opportunities very quickly.

Scoping out and dropping coin on lots of lots is something the company probably wouldn't do unless it thought it could ultimately sell them.

I must also say its deep pockets are a plus. Per the release, at the end of the period it had $1.75 billion in cash and marketable securities in its pocketbook.

On the flip side though, I'm still not jumping up and down because of collective worries: The government may wean us off of stimulus, and there could be higher interest rates in the marketplace. Neither of these would bode well for higher-end home sales (or any type of home sales, for that matter).

I'm taking my father's advice on this one: When in doubt, sit it out.

For my last take on Toll, click here.

The TJX Companies
The Massachusetts-based chain was out with its fourth-quarter results this fine morning. It put up $0.94, which was $0.03 north of expectations.

Some quick thoughts:

1. The bar was apparently set pretty high, as evidenced by options buying. And at first blush, it appears the company cleared that bar, turning in a good quarter.

2. Although not as sexy a story as Target (TGT) or the industry's behemoth, Walmart (WMT), I think the stock could still have some serious legs from current levels, even though it's already had a nice run.

3. The stock-buyback news continues to scratch me where I itch. It's a good sign of where the company thinks the shares may be headed down the road.

4. In the days ahead, I think analysts will be goosing their estimates, which could generate some spark.

5. Nobody really talks about it, but there's a nice little dividend here, to boot.

As I said in Four Reasons TJX Companies Is a Good Deal in early January, a fairer price for it would be somewhere in the mid to upper $40s, and nothing's changed since then.

Red Hat (RHT):
Justin Sharon points out in his column today that Caylon slapped an Outperform rating on the one-time high-flying company.

I realize the shares have had a nice run since the March 2009 lows, and the company has a decent following right now. But how high can we really go here? Given that it's expected to generate under 1 billion in sales and earn just $0.68 this year, I'm reluctant to follow the crowd on this one. If it were to come under $20 though, I might change my tune.

Altera (ALTR):
Stifel slapped a Buy rating on the California-based chipmaker.

In early December I suggested the stock was wasn't cheap. And although the stock has risen a smidge since then, I still feel the same way. That said, the Stifel rating could have a positive near-term effect. And if it manages to make a new 52-week high, we could see the shares trade even higher.

Have a great day!

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