If you are struggling with how Best Buy (BBY) could report such amazing numbers, if you are confused by all the chatter from Home Depot (HD) , JC Penney (JCP) and Lowe's (LOW) about how can there be a surge in spending on homes, just go listen to the Toll Brothers (TOL) call from yesterday, a call that put yesterday's new home sales number -- the best in nearly a decade -- in sharp perspective.
Toll Brothers is the company that's become the Rodney Dangerfield of the housing group -- the late self-deprecating comedian who never got enough respect.
Toll dominates the high end of the business, with homes that average $843,000, which by the way is an astounding 16% up from last year, largely because of a dearth of expensive homes. The call was remarkable in its own right, in part because the company had, indeed, bought back approximately 7% of its shares in the first nine months of its fiscal year. Perhaps it's a statement that it shouldn't be underperforming the housing and the housing-related SPDR S&P Homebuilders ETF (XHB) .
The underperformance does seem a little ridiculous, given the company's astounding 24% increase in revenues and 58% jump in net income, and the fact that company now ranks number six among global brands for the quality of its products, trailing only Action Alerts PLUS charity portfolio holdings Apple (AAPL) and Alphabet (GOOGL) , Trifecta Stocks portfolio name Disney (DIS) , and Nordstrom (JWN) .
But what I found most compelling about Toll is the overall geographical breadth of where it saw strength: Southern California, Northern California, Las Vegas, Northern Virginia, Denver, New Jersey, Pennsylvania, Seattle and Dallas.
That's amazing, especially given that Denver and Dallas, called out as terrific, are supposed to be deeply impacted by slumping oil prices.
It was this virtually nationwide increase in home prices, coupled with the positive linearity of the quarter, with each month stronger than the past, culminating with first-three-weeks of August snapshot of 18% order growth and a 23% growth in deposits - that's something we learned in the middle of the conference call -- that broke the stock out to about a 10% gain after actually trading down before the session began.
Why is this so important? Because until this quarter the perception was that the high end of the home business was getting weaker and therefore there was a ceiling to the appreciation process. If that was the case, then the investment people are making in their homes would be peaking, and that would spell a top for so many different businesses, including retailers levered to higher and higher prices.
Even better, the company saw none of the speculation that occurred going into the housing crash, and there's still a dearth of inventory out there, so there's no real end in sight to the possibilities of what your house could be worth.
You have to remember that, as John Stumpf, the CEO of Wells Fargo (WFC) , always reminds you, housing punches above its weight. When you have strength in housing, it leads to all sorts of good things for the economy, including the desire to improve your house to augment its worth.
Which gets us full circle to all of the standout retail numbers related to housing. When you see the stellar stats from those companies that cater to the home, you know it can be lasting. The $900 ticked plus strength at Home Depot means good things for companies as diverse as Whirlpool (WHR) , Stanley Black & Decker (SWK) , Masco (MAS) , PPG Industries (PPG) , Sherwin-Williams (SHW) , Fortune Brands Home & Security (FBHS) and all of the other companies with merchandise that fill the home related aisles of so many retailers.
Now, in this market, we instantly worry that when Janet Yellen speaks Friday she's going to quote Toll Brothers chapter and verse as a reason to have multiple rate hikes. I, however, have to emphasize that the trends driving these nationwide gains, trends like stronger employment even in the hard hit oil-related areas and trends like a credit loosening so people can buy these kinds of homes, aren't going to be decimated by a quarter point gain.
A small rate hike will turn out to be a buying opportunity, not a selling one, even as there are always weak-handed folks who bolt on any increase.
So keep this steady flow of good news in mind as everyone else frets about what Yellen has to say and think of these kinds of stocks as logical places to go, if, indeed, a September move is back on the table.