Jim Cramer is also forecasting a “lift across the board” for home building companies, including this one.
USG Corp. (USG)
From BI Research
I have recently, been looking for a new stock and one area under serious consideration is the housing sector where the market is tight in many parts of the country, like California and other southern states, and my logic goes that people who were thinking of getting a house and are now faced with rising interest rates have to make their move sooner than later.
Consequently, interest rates—now turning higher after being low for a long time—are, ironically, good—a tail wind. Now Hurricane Harvey is forcing my hand to “move sooner than later”.
Putting two and two together, I decided to check into US Gypsum, now called USG Corp. (USG). The company makes wallboard (made from gypsum) and Value Line says this division accounts for 83% of sales. It also makes flooring and other products.
The stock is trading around $30 a share. After two earnings disappointments in a row, estimates for this year are $1.68 with $2.06 forecasted for 2018 (pre-Harvey). But I think 2018 estimates will ratchet up considerably now. North America accounts for 86% of its $3 billion in sales.
I admit to shooting a bit from the hip here, so you may want to take it easy on USG accordingly, but time is of the essence and it makes sense to me on both accounts. I think damage repair of moldy wall board and flooring for this entire Texas area will go on for years, as may a stronger housing market, and I like the 2018 EPS growth and valuation even pre-Harvey.
Tom Bishop, BI Research, www.biresearch.com, August 28, 2017