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($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
The housing market is red hot. Interest rates are nearing their peak. But there aren’t enough houses on the market. What’s the missing link? Why building materials of course!
Today I bought Builders FirstSource, Inc. (BLDR) at 139.90. I will sell it in 4 – 6 weeks at 161.70. Here’s why I like BLDR so much:
Look at this amazing chart. This stock is up 160% in the last 12 months, yet its PE is still less than 9. A momentum stock that is still a great value.
Builders FirstSource, Inc. is a leading manufacturer and supplier of building materials serving the residential construction, repair, and remodeling markets in the United States. Builders FirstSource operates approximately 550 locations in 40 states. They are one of the largest suppliers of building products and prefabbed components. With the demand for new homes going strong, people are going to snapping up these building products like eating pistachios. Recent data, such as increased housing starts and permits, suggest a growing demand for new properties, creating a housing supply shortage that benefits Builders FirstSource.
The company aims to provide its customers with high-quality building materials and construction plans. You name it, they got it. Lumber, flooring, roofing, trusses, windows, doors – basically everything you need to build a house all by yourself. Their customers cover a wide array: from professional homebuilders, sub-contractors, remodelers, and Joe Sixpack who goes to Home Depot every Saturday for stuff.
Dave Rush, their CEO, has lead this company to increased growth and market share. Their revenue has increased yearly over the past several years and there is no evidence to suggest that there is any deviation in the near term. Increased housing demand, renovation activities, and infrastructure development have all contributed to the growth story.
ANAL-ysts are gushing over BLDR as they keep revising EPS estimates higher. Builders FirstSource) had its target price raised by research analysts at Barclays from $160.00 to $166.00 in a research note issued to investors recently. That’s already more than my target price. Wedbush lifted their price target on shares of Builders FirstSource from $135.00 to $175.00.
Zacks Ranks BLDR #1 (Strong Buy) as its stock price has been exceeding the Zacks Consensus EPS estimate by an average of an impressive 70% over its last four quarters. The stock momentum is evidenced by the fact that the stock gained 51% over the past 12 weeks. BLDR carries a beta of 2, meaning that if the market goes up 10%, BLDR will go up 20%. With the inflation numbers tapering, and the Fed possibly pausing on interest rate hikes, we could really see rocket fuel in the over all market and high beta stocks will be the way to go (provided that they are good values!). BLDR is definitely trading at a reasonable valuation. In terms of Price-to-Sales ratio, BLDR is currently trading at 0.76 times its sales. Builders FirstSource, Inc. is priced at a cheap multiple of 9x forward free cash flow, a clear sign that it's undervalued, especially with the spike in housing starts we’ve recently seen. Also, housing permits are now at a high not seen since since November 2022. Why are we seeing this? A lot of homeowners cannot afford to sell their homes because if they get a new mortgage, their interest rates will be much higher than what they are presently paying. First home buyers are thus screwed, and have to look at new houses to get a roof over their heads. Or they can try to buy a major fixer upper. Either way, they are looking at consumption of building materials and BLDR is saying, “hold my beer”. BLDR is getting both higher volumes and higher prices for the things that are flying out their door. They will crush revenue projections through the remainder of 2023. Not only is Builders FirstSource's balance sheet very strong but the business is returning significant capital to shareholders. The stock has a Forward P/E ratio of 13.56. This compares to its industry's average Forward P/E of 18.09. The company performance is pornographic. Return on Assets (ttm) is 18.72%. Return on Equity (ttm) is 49.90%. Holy crow!
BLDR continues to swing for the fences. They successfully completed a substantial number of value-enhancing acquisitions. They have expanded their footprint into high growth geographies and have demonstrated ability to successfully integrate, cross-sell and create operating synergies. Their acquisition pipeline remains active as they have a very strong balance sheet and ample liquidity to execute their M&A strategy. You know what’s really fun? They have $3.2 Billion deployed to repurchase common shares – essentially forcing the share price to keep going up!
Here’s what the boss had to say:
“We were able to exceed our forecasts through the strength of our product portfolio, continued execution of our strategic priorities, and the tireless effort of our team members,” commented Dave Rush, CEO of Builders FirstSource. “Our best-in-class end market exposure and distribution footprint, in addition to our unrelenting focus on operational excellence, are guiding us through this complex operating environment. We remain committed to enhancing our customer relationships by being the easiest to do business with. Our continued investments in value-added products, productivity initiatives, and digital solutions all work to reduce cycle times and costs, making homebuilding more affordable and efficient. Given our differentiated platform, experienced management team, and clear focus on delivering value-added solutions to our customers, we are well-positioned to outperform.”
Outperform they do. Here’s what I think. If you build it they will come. When they come, the stock will go zoom and $$$MR. MARKET$$$ will have yet another winner! I am HUGE!
$$$MR. MARKET$$$
The housing market is red hot. Interest rates are nearing their peak. But there aren’t enough houses on the market. What’s the missing link? Why building materials of course!
Today I bought Builders FirstSource, Inc. (BLDR) at 139.90. I will sell it in 4 – 6 weeks at 161.70. Here’s why I like BLDR so much:
Look at this amazing chart. This stock is up 160% in the last 12 months, yet its PE is still less than 9. A momentum stock that is still a great value.
Builders FirstSource, Inc. is a leading manufacturer and supplier of building materials serving the residential construction, repair, and remodeling markets in the United States. Builders FirstSource operates approximately 550 locations in 40 states. They are one of the largest suppliers of building products and prefabbed components. With the demand for new homes going strong, people are going to snapping up these building products like eating pistachios. Recent data, such as increased housing starts and permits, suggest a growing demand for new properties, creating a housing supply shortage that benefits Builders FirstSource.
The company aims to provide its customers with high-quality building materials and construction plans. You name it, they got it. Lumber, flooring, roofing, trusses, windows, doors – basically everything you need to build a house all by yourself. Their customers cover a wide array: from professional homebuilders, sub-contractors, remodelers, and Joe Sixpack who goes to Home Depot every Saturday for stuff.
Dave Rush, their CEO, has lead this company to increased growth and market share. Their revenue has increased yearly over the past several years and there is no evidence to suggest that there is any deviation in the near term. Increased housing demand, renovation activities, and infrastructure development have all contributed to the growth story.
ANAL-ysts are gushing over BLDR as they keep revising EPS estimates higher. Builders FirstSource) had its target price raised by research analysts at Barclays from $160.00 to $166.00 in a research note issued to investors recently. That’s already more than my target price. Wedbush lifted their price target on shares of Builders FirstSource from $135.00 to $175.00.
Zacks Ranks BLDR #1 (Strong Buy) as its stock price has been exceeding the Zacks Consensus EPS estimate by an average of an impressive 70% over its last four quarters. The stock momentum is evidenced by the fact that the stock gained 51% over the past 12 weeks. BLDR carries a beta of 2, meaning that if the market goes up 10%, BLDR will go up 20%. With the inflation numbers tapering, and the Fed possibly pausing on interest rate hikes, we could really see rocket fuel in the over all market and high beta stocks will be the way to go (provided that they are good values!). BLDR is definitely trading at a reasonable valuation. In terms of Price-to-Sales ratio, BLDR is currently trading at 0.76 times its sales. Builders FirstSource, Inc. is priced at a cheap multiple of 9x forward free cash flow, a clear sign that it's undervalued, especially with the spike in housing starts we’ve recently seen. Also, housing permits are now at a high not seen since since November 2022. Why are we seeing this? A lot of homeowners cannot afford to sell their homes because if they get a new mortgage, their interest rates will be much higher than what they are presently paying. First home buyers are thus screwed, and have to look at new houses to get a roof over their heads. Or they can try to buy a major fixer upper. Either way, they are looking at consumption of building materials and BLDR is saying, “hold my beer”. BLDR is getting both higher volumes and higher prices for the things that are flying out their door. They will crush revenue projections through the remainder of 2023. Not only is Builders FirstSource's balance sheet very strong but the business is returning significant capital to shareholders. The stock has a Forward P/E ratio of 13.56. This compares to its industry's average Forward P/E of 18.09. The company performance is pornographic. Return on Assets (ttm) is 18.72%. Return on Equity (ttm) is 49.90%. Holy crow!
BLDR continues to swing for the fences. They successfully completed a substantial number of value-enhancing acquisitions. They have expanded their footprint into high growth geographies and have demonstrated ability to successfully integrate, cross-sell and create operating synergies. Their acquisition pipeline remains active as they have a very strong balance sheet and ample liquidity to execute their M&A strategy. You know what’s really fun? They have $3.2 Billion deployed to repurchase common shares – essentially forcing the share price to keep going up!
Here’s what the boss had to say:
“We were able to exceed our forecasts through the strength of our product portfolio, continued execution of our strategic priorities, and the tireless effort of our team members,” commented Dave Rush, CEO of Builders FirstSource. “Our best-in-class end market exposure and distribution footprint, in addition to our unrelenting focus on operational excellence, are guiding us through this complex operating environment. We remain committed to enhancing our customer relationships by being the easiest to do business with. Our continued investments in value-added products, productivity initiatives, and digital solutions all work to reduce cycle times and costs, making homebuilding more affordable and efficient. Given our differentiated platform, experienced management team, and clear focus on delivering value-added solutions to our customers, we are well-positioned to outperform.”
Outperform they do. Here’s what I think. If you build it they will come. When they come, the stock will go zoom and $$$MR. MARKET$$$ will have yet another winner! I am HUGE!
$$$MR. MARKET$$$
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