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Today's subject,

Toll Brothers

(TOL) - Get Report

, was chosen by the readers

last week; please see our poll below to help determine the next stock to get the "360 Degrees" treatment.

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'Cover Those Shorts!' by Robert Marcin

The following comments were taken from various Columnist Conversation posts on

Real Money

by Robert Marcin.

I can't believe how much negative commentary Toll's

Feb. 7

announcement

about its first-quarter orders is generating on

CNBC

. Those guys and gals don't have a clue.

First, Toll is still growing deliveries, revenue and profits this year. Reading others, even here, you get that its business is imploding. Wrong.

Secondly, the orders did plunge, down some 35% in units. However, it was against a 60% comparable last year when Toll blew through its new communities.

Finally, why does Toll get all the attention?

Pulte

(PHM) - Get Report

announced good sales, profits and orders. No attention on

CNBC

for this news. And it's the second-largest builder in the country! Toll is a smallish, high-end builder only.

Conditions are absolutely perfect for the sector. The housing market has moderated to very slow growth. Therefore, the

Fed

can stop hiking rates. But these companies are still growing strongly due to large market-share gains. Huge share buybacks have been announced by many builders. That can only add fuel to the fire. Cover those shorts!

If this thing plays out in a best-case scenario, i.e., the major builders grow through an industry slowdown, watch out above for the stocks! I could see 50%-plus moves in the strongest players.

Very strong housing starts and permits for January. While weather helped, the market remains stubbornly decent. Would love to see the talking heads on

CNBC

give as much attention to these numbers as they did to the Toll problem.

No, I don't believe the housing market will continue to grow this year. But as the only vocal homebuilder stock bull in the universe, I continue to expect a softish landing in the sector, just like the Fed itself.

On another note, Bill Miller, value guru at Legg Mason, recently revealed significant new ownership stakes in a few large homebuilders, including my favorite!

While Bill does not get every trade right, like his

Amazon

(AMZN) - Get Report

or

Kodak

( EK) longs, his batting average is exceptional. What does he understand about the homebuilders that the shorts don't?

'The Swing Trader: Stay Away' by Alan Farley

Alan Farley is a professional trader and a contributor to RealMoney. He also produces a premium product for TheStreet.com called The Daily Swing Trade.

I've got nothing kind to say about Toll Brothers at this juncture. Thestock broke its 200-day moving average last September, and every rally intoresistance since that time has marked an excellent short-sale opportunity.Despite the recent uptick, there's still no evidence of genuine accumulation orinvestor interest. This stock still shows considerable downside and couldreach the low $20s in the next few months.

'Is Housing a Bubble?' by Scott Rothbort

This column by Scott Rothbort is a special bonus for

TheStreet.com

readers. It contains excerpts from columns that appeared on

Street Insight

on Feb. 15 and Feb. 22. To sign up for

Street Insight

, where you can read Rothbort's commentary in real time, please click here.

The mistake by investors and analysts is the notion that a slowing down in housing is the dawning of the age of a housing depression. A second-degree mistake is to declare the housing market an economic bubble. The true bubble, the Nasdaq/Internet bubble of the late 1990s went from a peak of 4704.73 for the Nasdaq 100 on March 27, 2000 to a trough of 804.64 on Oct. 10, 2002, equating to nearly an 83% drop. Even at today's price, the index is about 65% off of the high-water mark.

However, when it comes to housing, you have to ask yourself:

Will my home be worth 65% to 85% less than it was at the end of 2005?

Will the earnings of KB Homes, Toll Brothers or their peers decline by 65% to 85% from the 2005 levels?

If you think the answer to those questions is yes, then we have a bubble. The population in the U.S. is growing by just over 1% per year, and we are closing in on 300,000,000 (counted) people in the U.S. So then ask yourself, what are we going to do with all of the additional population in this country? Well, maybe we are not in a housing bubble after all. Perhaps some of the quality apartment REITs are the right answer. We own

Archstone-Smith

( ASN).

So if you are just not quite sure of which way this bubble ... uh, ball, will bounce, then take a look at the newly issued

Homebuilder Spyders

(XHB) - Get Report

and the even fresher options on the XHB. There might be a straddle in your future if we can get some interest in the XHB options.

Homebuilding stocks themselves are in a state of flux. The bears are still waiting for a bubble to appear, let alone burst. The Fed has clearly slowed down the industry. Last month, KB Homes reported a slowdown in new orders and greater-than-expected cancellations. On the other hand, valuations for the homebuilders are at multiyear lows, providing some exceptional value. Even

Barron's

, the chief protagonist for the housing bears, recently had bullish words printed supporting Toll and its peers.

As much as I want to start a position in Toll, I am holding back until I get a real capitulation in the stock or a clearer sign from the Fed regarding the end of its assault on the housing market.

'A House Divided' by Nick Yulico

With the housing market slowing, why bother investing in homebuilding stocks if the group's best days are behind it? Well, the sector is cheap, the bulls say, and even if fundamentals cool down, earnings won't drop off a cliff.

"Our view is that going forward, we're going to see a slowdown in activity, but not enough to derail anything," says Sam Lieber, portfolio manager of the

Alpine US Real Estate Equity

fund (EUEYX), which has about 50% of its holdings in homebuilders.

Builders' 2006 results are largely in the bag, because the bulk of revenue will come from the companies' backlog of homes already sold but not yet closed upon. The real issue keeping investors nervous relates to the scenario for 2007, and orders in the all-important spring selling season will provide a crucial look at homebuilders' prospects.

Recent order numbers from the group have been mixed. Large builders such as

D.R. Horton

(DHI) - Get Report

and Pulte Homes posted net order growth of 16% and 10%, respectively, for the fourth quarter. However, smaller builders focused on fewer geographic markets have reported disappointments, such as

Standard Pacific's

(SPF)

13% year-to-date order decline and

MDC Holdings'

(MDC) - Get Report

10% fourth-quarter order fall.

"I think the larger builders are showing the benefits of their diversification," says Jack Lake, an analyst for Victory Capital Management, which owns Pulte and

Lennar

(LEN) - Get Report

.

Toll Brothers, which doubled earnings in 2005, has been the recent black sheep of the large builders, as it reported a 29% drop in fiscal first-quarter new orders for its luxury homes. Analysts' average estimate now calls for Toll to see earnings per share drop 4.6% in 2007 from 2006.

It takes roughly seven to nine months for orders to convert into revenue, and that means the order numbers that builders report in the coming months will provide more transparency for late 2006 and early 2007.

Click here to read the rest of

TheStreet.com

staff reporter Nick Yulico's story.

'Prepare for a Bounce' by Richard Suttmeier

The following is an except published on

RealMoney.com

on Feb. 16.

Housing starts surged 14.5% in January to an annual rate of 2.28 million, thanks to mild weather. This supports my view that homebuilders should bounce off the value levels they tested at the recent lows.

In my last update on the homebuilders, Jan. 19, I suggested that investors "

Prudently Prune Homebuilder Holdings" and look to buy weakness to my value levels. Recent weakness reached these levels after data showed that single-family housing starts had softened 12% in December vs. November and were 8% lower year over year, with the median sales price for new homes down 3% year over year.

A month ago, the homebuilders were close to the upper end of their trading ranges. My model indicated that shares were not likely to bust through to new highs, even though the companies all rated strong buys with ValuEngine. The lesson here: The charts and levels at which to buy and sell are considerations just as important as the ValuEngine rating. My suggestion was to reduce holdings and then rebuild the positions on weakness.

When I first profiled the homebuilders back on

June 21, my thesis on the group was that homebuilder stocks were the hottest momentum trades in the market and had to be handled with care. At the time, their monthly chart profiles were parabolic, the condition that precedes all bubbles -- and bubbles always have unhappy endings.

January's housing-starts data were a catalyst for market participants to push shares down to and below the value levels I posted Jan. 19. Those levels are now pivots. Remember, as you review my profiles of these companies, that my strategy is to add to positions on weakness to the value levels and to reduce holdings on strength to the risky levels.

Toll Brothers traded as low as $28.70 after Jan. 19. Add to positions on weakness to my annual value level at $25.59 and reduce positions on strength to my semiannual risky level at $36.98.

At the time of publication, Marcin was long Pulte, although positions may change at any time.

Robert Marcin is the founder of Defiance Asset Management, a private investment management firm. Client accounts managed by Defiance Asset Management often buy and sell securities that are the subject of commentary by Marcin, both before and after it is posted. Under no circumstances does this column represent a recommendation to buy or sell stocks. This column is intended to provide insight into the financial services industry and is not a solicitation of any kind. Neither Marcin nor Defiance Asset Management can provide investment advice or respond to individual requests for recommendations. However, Marcin appreciates your feedback;

click here

to send him an email. Marcin is not required to update or held responsible for updating any portion of this column in response to events that may transpire subsequent to its original publication date.

Alan Farley is a professional trader and a contributor to

RealMoney. Alan is also the author of the book The Master Swing Trader and operates a Web site related to swing trading (HardRightEdge.com). He also produces a premium product for TheStreet.com called

The Daily Swing Trade.

Scott Rothbort is the founder of LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed accounts to its clientele. At the time of publication, LakeView was long Archstone-Smith although holdings can change at any time.

Richard Suttmeier is president of Global Market Consultants, Ltd., chief market strategist for Joseph Stevens & Co., a full service brokerage firm located in Lower Manhattan, and the author of

TheStreet.com Technology Report

newsletter. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time.

Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback --

click here

to send him an email.