Jim Cramer’s Game Plan This Week: 10 Stocks to Watch

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

Number of Hedge Fund Holders: 54

Cramer highlighted that Toll Brothers, Inc. (NYSE:TOL) stock initially rose after the Fed’s rate cut, but stalled as bond yields increased. He noted that once yields fell, the stock regained strength.

“Toll Brothers, high-end housing, reports Monday evening. When the Fed cut was announced, the stock flew up, but then it stalled because bond yields actually and surprisingly went higher. Given that mortgage rates are priced off the long end of the bond market, you can see why the stock struggled and then bond yields came down again and Toll’s been as strong as ever. Can it deliver on these numbers? Is lumber price too high? Well, we won’t have to wait too long to find out.”

Toll Brothers (NYSE:TOL) designs and builds luxury homes, including condominiums and single-story homes, and develops communities with various amenities. With favorable market conditions, such as ongoing demographic trends and a supply-demand imbalance in the housing market, the company remains optimistic about solid demand through the end of fiscal 2024 and into 2025.

While lower mortgage rates could stimulate the resale market, CEO Douglas Yearley Jr. pointed out that the supply of homes will continue to be constrained due to nearly 15 years of underproduction.

As a result of strong earnings in the third quarter, Toll Brothers (NYSE:TOL) has raised its full-year guidance for the third consecutive quarter. The company now expects to deliver between 10,650 and 10,750 homes for the year, with an average price of $975,000, marking a $10,000 increase from its previous projections.