Builders FirstSource, Inc. (NASDAQ:BLDR)

>30 recycle

Robotti

good upside here.....i hope....

ntmf

This is one of my STARZ.
Here is the thought process on this STAR:
a) Divided rate over Zero
b) 3 Year Beta between -5 & +3
c) 15% + Insider ownership
d) No greater than -50% Growth rate for the last 3 years (tought= last couple of years so goo that insiders are still owning the stocks)
e) Current CAPS rating between 3 Stars & 5 Stars
Open to all Industries and Sectors screened this down to just 250 stocks. I like round numbers. 12 of them I already own through other screening tools. I tend to be somewhat conservative but looking for 3 things at this point in my investing:
1. Stability & Strength
2. Yield and Modest Growth
3. Strong Position within a sector regardless of whether the entire sector is strong or not. Each sector has to perform to some degree for the whole world economy to function. I am looking for 5 or more years down the road, ROI, and Growth.
Not looking for rockets, just stars. This is a Star!!

Good growth and earnings.

Housing construction will eventually turn the corner. Restructuring their debt may or may not be a good move. While not at the bottom of their price range, I think they have greater potential in the long run to go up.

Oversold (but then again, what isn't?!)

Yep, they have made some crappy financial decisions to serve their greed for the short term... At their current price and limited shares, I am willing to risk it. I believe they are set to capitalize on a market turn around...however, I don't believe the turn around will be until next year or later. So, I would look to buy in the 3-5 dollar range.

Building Material

Cramer predicts that the real estate market will bottom out in Q3 2009, while real estate related stocks have bottomed out this past july.

Lets see if this happens...

Floridabuilder marks this underperform for 1YR.

On the other hand, the tag "Home Improvement (13)" is down 20% in a year. It's not down as much as Home Builders.

Will drop back down, after this little spike. Make some easy points. Market is still down in this sector. Ride it down for points.

Can't go much lower. Housing bubble is moving past, next year this one will go up.

The bottom is close, might not be here yet, but its close. Builder has done a good job managing through the downturn, has enough cash to get through the rest of it, and be in good shape on the back end.

Value

From my short ideas/valuation screen

My favorite indicator of value in small cap stocks is insider buying. According to "Who's Buying Now" of 3/10/2008 BLDR had almost 3 million in insider buying during the previous week. Since Builder's First Source (BLDR) market cap is under 300 million, this is substantial insider buying.

According to the "Who's Buying Now" commentary, the company has managed to create $60 million in free cash flow and cut debt by 12.5% during what has been a terrible time to be in the building supplies business. Just think what this company can do when the market turns!

The stock is incredibly cheap at this time, the fundamentals are sound, There may be more to come with the mess, but contractors are still building not so much at a feverous pitch, but that is good for inventory of homes to be consumed. Depending on the area you live there is still a demand for homes. In the heat of all the subprime news, we sometimes forget that most of the homes purchased in the last few years were not subprime, but plain vanilla 30 year fixed.
Charles