Home renovation guru Bob Villa always claims that a good foundation is the key to any solid house. Toll Brothers
Toll produced earnings per share of $0.89, outpacing analysts' estimate of $0.87 and trouncing the $0.72 it earned last year. The company's revenues grew 35% from last year's second quarter and beat the expected number by more than 3%.
The company's white picket fence extends beyond the second quarter as Toll expects its record quarter-end backlog of $3.74 billion in revenues to encompass most of its projected revenues through the second quarter of 2005. This will most likely translate into record results for fiscal 2004 and 2005.
The company says it does not anticipate "much impact from interest rate fluctuations," because it has excelled in recent periods of significantly higher interest rates.
It has become painfully obvious through recent results that the bargain-basement homebuilders have bore the brunt of the interest rate fluctuation sledgehammer. Companies such as Palm Harbor Homes
However, when you move from the outhouse to the penthouse, the sun is shining bright. A whole host of companies, including WCI Communities
The homebuilding sector has experienced a few hiccups in the past few years, but has inevitably recovered to produce strong gains. My advice would be to ride the sector until either the paved road turns to dirt or Mr. Greenspan goes on a rate-increase frenzy. The sector's history points to an upward trend for Toll and its housing brethren for at least the next year.
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Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.