THE BULLISH HOMEBUILDERS VIEW OF THE U.S. ECONOMY
Homebuilders are saying the same thing as hotels… that “things can’t be all that bad.”
This year, we’ve featured many charts that display how the U.S. economy, while not great, can’t be doing all that bad.
For example, we’ve noted the solid price strength in Home Depot and transportation stocks.
The profits and share prices of hotel operators rise and fall with America’s ability and desire to take business trips and vacations.
This month, Wyndham shares struck an all-time high.
The price action in Toll Brothers (TOL) is telling us the same thing.
Toll Brothers is America’s largest luxury homebuilder.
It builds big “McMansion” homes with price tags well over $500,000. In recent quarters, Toll Brothers has reported strong orders and rising profits.
This has produced a huge rally in Toll shares.
As you can see from today’s chart, Toll shares declined with the rest of the market during last summer’s selloff.
Since bottoming, Toll has rallied more than 100%… and just hit a new 52-week high. As long as stocks like Toll are soaring, we have to say that the U.S. economy, while not great, “can’t be all that bad.”
– Market Notes
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Source: Market Notes
