Jim Cramer Backs Toll Brothers, Calls It a 'Buy' Amid Housing Market Rebound

Jim Cramer highlighted Toll Brothers (TOL) during a live segment, calling the stock a 'must-buy' opportunity amid a broader shift in housing market sentiment. The comment followed recent data showing a 4.3% month-over-month increase in new home sales in November, according to the U.S. Census Bureau, suggesting renewed buyer interest. Cramer emphasized TOL’s defensive positioning, citing its strong balance sheet with $1.8 billion in available liquidity and a net debt-to-EBITDA ratio of 2.1x, well below the sector average of 2.7x. The homebuilder reported third-quarter adjusted earnings per share of $2.17, surpassing analyst expectations by $0.12, and guided for full-year revenue growth of 6.2% to $10.3 billion. TOL’s average selling price of $822,000 remains above the national median, reflecting its focus on high-end markets such as California, New York, and Florida. Cramer noted that the company’s backlog of $9.6 billion represents 19 months of future revenue, a key indicator of near-term stability. Trading activity in TOL spiked 14% on Friday, with volume exceeding 2.1 million shares—68% above the 30-day average. The stock closed at $48.90, marking a 7.6% gain on the day and a 23% year-to-date rise. Institutional investors added 3.2 million shares in the past month, according to TRACE data, suggesting growing confidence among professional players. The endorsement could influence investor sentiment across the broader homebuilding sector, which includes builders like Lennar (LEN), D.R. Horton (DHI), and PulteGroup (PHM). Given the Federal Reserve’s potential pivot toward rate cuts in 2026, analysts are reevaluating housing as a sector poised for recovery, with TOL’s valuation at a 10% discount to its five-year average P/E ratio.