Hit From Toll's Next Bad News Depends on Fed

Toll's (TOL - commentary - Cramer's Take) going up because it's not losing money. Terrific.

But as I go through the quarter, which closed before the crisis of Countrywide (CFC - commentary - Cramer's Take), Accredited Home (LEND - commentary - Cramer's Take), First Magnus and Thornburg (TMA - commentary - Cramer's Take), I wonder how valid the numbers are.

Housing numbers have been fungible all along. We keep seeing so many different kinds of sales -- sales that get cancelled, sales that are contingent on financing, which is no longer a given, sales that depend on selling your other house that then don't work out -- that you really have no idea how Toll is doing.

But at $22, Toll becomes another option play on the Fed because even though Toll was caught leaning the wrong way in building homes -- and it's still building -- if we get a Fed cut, you will want to own this one for certain.

There's a lot of mystery around Toll. The company has said that the financing for most of its customers is much better than for the rest of the industry's customers and is not no-doc, which has become of course totally forbidden as a way to get loans. But in its downgrade of Toll Tuesday, Bank of America said that low-doc or no-doc loans accounted for 43% of Toll's sales. That business is not coming back.

So my presumption is that there is another big downtick coming in Toll orders and earnings. That won't matter with Fed relief. It sure will matter without it.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Accredited Home Lenders to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Cramer had no positions in any of the stocks mentioned in this post.

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