September 19, 2012 Comments

Toll Brothers was up another 3.5% to $36.41. It’s now up 177% from its low of $13.16 that occurred just about 12 months ago. But it’s “only” up 78% from the $20.42 at which it was originally put on this site. This just goes to show that the gain is a LOT more when you buy the stock at a somewhat lower price. But it is not realistic to think that we can buy at the absolute bottom .

Our latest update for this stock, just three weeks ago, rated it only a Speculative (lower) Buy at $32.28. I am not a buyer at this price but may hang onto my position or may trim to take profits.

Our history with this stock is it was added to the Site as a Speculative Buy at $21.03 on June 5, 2011. The idea was that it would rise in price when the U.S. house prices started to recover. I had no cash to Buy at that time but bought on August 3, 2011 at about $19. (This turned out to be just before the debt ceiling crisis of August 2011 and so not great timing).

Subsequently it did fall as low as $13.16.

I updated the analysis to Speculative Buy at $20.42 on December 22 and I bought some more on December 23 , 2011 at about $20. Apparently I did not take advantage of the lower price in September. I bought some more on March 6, 2012 at about $22. And more on April 9, 2012 at about $23. (There may have been another buy as well at a higher price, I am just going from searching the daily comments). TD shows my average price was $19.50 in one account and $23.77 in another and $22.60 in a third account (possibly that includes impacts of currency changes, I am not sure how TD Waterhouse reports average prices for U.S. stocks held in a Canadian dollar RRSP or RESP account)

I sold 20% of the position on June 29 at about $30. Sold another 20% on August 28 at $32.39. Perhaps by selling I have turned what could have been a VERY good gain into just a quite good gain. But I thought it prudent to trim as the price rose especially in this case where the P/E ratio is very high because the earnings still have a long way to go to recover.

I don’t think my buying and selling pattern in Toll Brothers was all that clever. But what did work out is that I identified it as a probable bargain. I bought and then bought more when it continued to look like a good bet. Sadly, i failed to buy near its low, perhaps due to lack of funds or just out of fear. Then I trimmed slowly as the price rose. I don’t always trim at higher prices and I have no “typical” buying / selling pattern. All of my trading tends to be ad-hoc. But it also tends to be driven by the ratings above.