This column was originally published on RealMoney on Aug. 25 at 2:26 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.
blew it out again.
The quarter was picture-perfect. No, you won't really find any flies on it. But what's happening with the stock? After a brief flirtation up, it's coming down.
I believe that's the trading death knell of the stock. There are nine analysts who currently recommend the stock out of a total of 17. I believe that they will take their cue from today's action and be more subdued than they would have been if the stock had stayed up. In fact, I believe one if not two will break ranks, and you should be nervous about that.
First, Toll is easy to downgrade. It sells at a 2-3 point multiple premium above all of the other companies in the group, and arguably, it simply isn't that much better than the others, even if it is almost all high-end -- and
we like luxury here as a theme.
Second, this is a company with a long history of insider selling after the quarter, and the analysts won't want to have to explain that insider selling for the umpteenth time.
downgrade it? If you liked it, you caught a 120% gain year-over-year. Who else on the research staff has that kind of gain on a stock in his or her portfolio?
Notice, I didn't once talk about the fundamentals. They are solid. That won't matter. What matters is the psychology and the risk/reward, and neither is good right here for Toll. And I say that with the added caveat that I have been among Toll's biggest fans for most of its five year run to destiny.
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