10 Best Golf Stocks to Buy According to Analysts

3. Toll Brothers, Inc. (NYSE:TOL)

Analysts’ Upside Potential as of April 9: 51.13%

Toll Brothers, Inc. (NYSE:TOL) is next on our list of the Best Golf Stocks. The company creates communities with leisure features like golf courses. The firm takes great satisfaction in owning a sizable portion of some of the best land in the business. Premier land inventory, paired with luxurious, customizable designs, enables the company to charge industry-leading average selling prices (compared to public peers).

Toll Brothers, Inc. (NYSE:TOL) experienced exceptional growth in the first quarter, signing 2,307 net contracts worth $2.3 billion, representing a 13% surge in units and a 12% increase in dollar value over the previous year. Buyer commitment remained strong, with a low contract cancellation rate of 2.4% of the initial backlog. Profitability improved as the adjusted gross margin rose to 26.9%, topping expectations by 65 basis points. Furthermore, the deposit conversion ratio was 82%, surpassing the five-year average of 70%, showing outstanding customer follow-through. The firm retained a strong land position, owning or controlling roughly 56,000 lots, with 56% under option, providing flexibility in land acquisitions.

To bolster its financial position, the business extended the maturities of its credit facilities until February 2030 and increased the size of its revolving credit facility to $2.35 billion, therefore improving liquidity and long-term financial stability.

Baron Real Estate Fund stated the following regarding Toll Brothers, Inc. (NYSE:TOL) in its Q4 2024 investor letter:

“As noted earlier in this letter, we chose to decrease the Fund’s homebuilder exposure in D.R. Horton, Inc., Lennar Corporation, and Toll Brothers, Inc. (NYSE:TOL) in the most recent quarter following exceptional share price performance over the prior two years. From September 30, 2022, through September 30, 2024, shares of Toll Brothers, Lennar, and D.R. Horton increased 269%, 155%, and 184%, respectively. Homebuilder valuations for our investments had approached near peak valuations from prior cycles (at or above 2 times tangible book value). We also have concerns that the recent 100 basis point increase in interest rates will further crimp housing affordability. This could lead to flattening home prices and elevated homebuilder incentives to entice buyers to purchase a home. Further, the new administration policy decisions around tariffs, immigration, and deportation may increase the cost for labor and materials. The issues cited above may lead to pressure on homebuilder gross margins in 2025.

The shares of several homebuilders and residential-related building product/ services companies foreshadowed some of these concerns in the fourth quarter and valuations are becoming more compelling. We are monitoring developments closely and may look to acquire additional shares in 2025…” (Click here to read the full text)