Toll Brothers (TOL), mcap=$4.8bn, price $42.24 vs $43.66

$TOL pitch:
– Leader in US luxury homebuilding market and 5th largest homebuilder.
– Cheap relative to tangible book value (0.9x) and vs historical levels.
– Book value comprised of owned/optioned lots that were mostly acquired at pre-covid pricing.
– Limited build-out risks as the majority of TOL homes are pre-sold and built-to-order.
– 70% upside if rerates to historical multiples.
– Insiders own 7% of shares.

$TOL valuation:
– Trades at 0.9x TBV vs a historical average of 1.4x and below peers $PHM and $DHI.
– The target of $78/share at the historical multiple and expected YE23 TBV of $55/share.

Exp. gain: +70% to $78/share by YE23.

Full TOL write-up (free guest account required):

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