It isn't a great time to be a homebuilder. Rising interest rates are pricing buyers out of the market, and materials inflation is running wild. And other home sellers are still on the market with FOMO on generationally high prices.

The market is well aware. Most homebuilders are trading for single-digit P/Es, with some as low as three or four. This may be nauseating to some investors, but for value investors, it's the perfect environment. As Warren Buffett famously said, "Be fearful when others are greedy and greedy when others are fearful."

Toll Brothers (NYSE: TOL) is a luxury homebuilder. It has unique advantages in a rising rate environment but has still fallen over 30% this year. Let's talk about how the company is insulated from housing market fears and what level of risk is already priced into the stock.

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Source Fool.com