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TOL - $29.60 +$1.90 - Toll Brothers

Toll rallied off support at $27.50 and triggered our entry on Monday. The builders continued higher all week on stronger than expected New Home starts. Toll does not have the same kind of subprime pressures some other builders are facing. They deal in a higher class home and buyer.

Company info:

Toll Brothers, Inc. designs, builds, markets and arranges financing for single-family detached and attached homes in luxury residential communities in the United States. It is also involved, directly and through joint ventures, in projects where it is building or converting existing rental apartment buildings into high, mid and low-rise luxury homes. It caters to move-up, empty-nester, active-adult, age-qualified and second-home buyers in 21 states of the United States. At October 31, 2006, the Company operated from 398 communities containing approximately 31,910 home sites that it owned or controlled through options. Of the 31,910 home sites, 25,377 were available for sale and 6,533 were under agreement of sale but not yet delivered. Of the 398 communities, 300 were offering homes for sale, 14 had been offering homes for sale but were temporarily closed, and 84 were sold out but not all homes had been completed and delivered.

Toll is relatively free of the subprime stigma. Toll deals in luxury homes for an older population. Strong support at $27 has been holding since early March. Options are VERY cheap. Fitch ratings said on Friday they felt the housing market was bottoming and gave Toll its highest rating of the group. We are going to buy a breakout of the current range of a washout to 52-week support.

Breakout target: $28.50 hit 4/16
Position: 2009 $35 LEAP OTY-AG @ $3.50

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