11 Stocks on Jim Cramer’s Radar

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

Number of Hedge Fund Holders: 64

A caller mentioned that they bought Toll Brothers, Inc. (NYSE:TOL) as it is among Cramer’s favorites and asked his opinion on the company. This is what Cramer said in response:

“Okay, so we thought when rates were going up that it would hit… it never did and then suddenly just the tsunami comes along. It’s selling at eight times earnings, which means the, the estimates are way too high. We have to have estimates come down and then we’ll re-look at Toll. But you’re absolutely right. I think they’re great and I think Doug Yearley is the bomb.”

Toll Brothers (NYSE:TOL) focuses on the design and construction of luxury homes, including condominiums and single-story properties, and develops communities with various amenities. A few weeks ago, Cramer said:

“Conference call was instructive because it showed there are cracks developing with lower average housing prices around the country. Some very soft markets, something that’s not supposed to happen when the Feds cut rates. Mortgage rates are still way too high for this group. I want you to listen [to] what CEO, Doug Yearley, on the conference call said, “Those areas where the buyers are a bit more hesitant, I think it’s number one.

Those areas that have had more significant price appreciation through the Covid years than other areas so instead of a 40 or 50%… percentage price increase over the last five years, there are end markets where there [has] been a 60%, 70%, 80%… and a 100% price increases, that includes Florida, primarily Austin, Texas. Those prices have to come down. That’s, that’s raw inflation. Those have to come down before we beat inflation in this country.”