USG Corp (USG)

Gamedian (88.36) Submitted: 8/18/06 5:22 PM : Start Price: $46.42 USG Score: -48.60

I would not talk about fundamentals much. USG made 300 million dollars in the latest quarter. CEO Foote has steered the company through about 5 years of reoranization, and yet has increased operational performance of the business. Gross margins have been increasing. USG continues to remain competitive despite being confronted by numerous lawsuits. The abestos trust that is going to be set up at least brings a certain degree of certainty that the numerous Abestos Personal Injuries Claims would not drive the company into bankruptcy. I believe USG's greatest challenge now is to be able to pay off their 3 billion abestos trust liability (if FAIR act not enacted) and to continue to expand their business.
The market has priced USG to just 6 dollars above the backstop price that Buffett is willing to backstop the whole rights offering. Knowing the margin of safety Buffett demands, it looks like it might be a good time to load up on USG.
This is just an icing on the cake. I believe USG has a sound business model with prudent management that is shareholder oriented and a huge distribution network. I believe that the current fall in it's market price and hovering around 46+ per share because of negative sentiment regarding the housing sector is way overdone. This is business. These kinds of things happen. But in the long run, people still need to build houses, that need ceiling, wallboards, a distribution network to get all these materials. USG would continue to do the business it has

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