We recently published a list of 11 Stocks on Jim Cramer’s Radar. In this article, we are going to take a look at where Toll Brothers, Inc. (NYSE:TOL) stands against other stocks that are on Jim Cramer’s radar.
Jim Cramer, the host of Mad Money, recently shared his thoughts on the role tariffs play in the market. While he acknowledged that Wall Street generally despises tariffs, he admitted to having a somewhat different perspective, expressing that he actually likes tariffs, but only when their application is certain.
According to Cramer, uncertainty surrounding tariffs contributes significantly to market instability, especially for sectors that are ill-prepared to absorb the impact of new trade policies. One sector that Cramer singled out as particularly vulnerable to the effects of higher tariffs is retail. He pointed out:
“Retail, are you kidding me? We stopped making things in this country years ago. As part of the bargain we have with Mexico and China where Americans get cheap goods, much cheaper than we could possibly make here, in return for wiping out almost a hundred percent of our manufacturing capacity.”
READ ALSO: Jim Cramer Said These 13 Stocks Can Hold Their Value Amid Tariffs and Jim Cramer Thoughts on 8 Stocks As He Discussed Market Froth
The arrangement, Cramer explained, was a deal embraced by both Republicans and Democrats alike. He likened it to a “reverse poltergeist” situation where jobs were moved, but the foundational industries remained behind. The shift left many former manufacturing workers, such as seamstresses and laborers skilled in operating heavy machinery, without the means to return to their old positions.
As Cramer put it, there is no longer any real expertise in these areas in the U.S., and even if there were, it would come at a significantly higher cost to produce locally. He stressed that, given these circumstances, it is nearly impossible for U.S. retail to compete in a space that relies heavily on imports. He added:
“I don’t want to be too dire about this everyday lower price initiative by the President of the United States, but because this is a stock show, I have to tell you something, at times I’m gonna say it, I’ve been missing old President Biden.”
He remarked that, despite Biden’s apparent disdain for business interests, at least the former president remained consistent in his stance, even if he did not fully understand the stock market. In a departure from his usual commentary, Cramer even expressed a certain nostalgia for the policies of former President Biden.
“Here’s the bottom line: Wall Street hates tariffs, but what it hates even more is inconsistency and unpredictability. I’m actually pro-tariff. That’s not the point. I think the market would be in much better shape if President Trump used what I would call rapidly escalating tariffs. You start them at 15%, you go up 5% every single weekend and you stop at 50% because at least we then have some clarity and what’s coming and more important, when it will occur.”
Our Methodology
For this article, we compiled a list of 11 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 27. We listed the stocks in ascending order of their hedge fund sentiment as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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.”
Overall, TOL ranks 5th on our list of stocks that are on Jim Cramer’s radar. While we acknowledge the potential of TOL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TOL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
