Insteel Industries, Inc. (NASDAQ:IIIN)

Hoping $20+ by '12

Can't get much worse, should be a lot better in 2011

Insteel Industries is lookin' a little putrid right now, but it gives me several good feelings as a long-term investment:
(Note: This is an excerpt. View the full extended blog:
http://caps.fool.com/Blogs/mold-to-marble-getting-iiin/427774)

1) IIIN IS BORING. Fantastic attribute. Let's sample the good: One of Insteel's three core strategies is "operating as the lowest cost producer" of steel wire reinforcing products for concrete construction applications. See the photo above. The put steel inside concrete and make important stuff work. I'm already excited.

2) NO DEBT. Insteel made a massive payment in 2009 to clear long-term debt. Now the cash flow is even more sweet and tantalizing. There's a solid history of profiting while limiting liability and expeditiously paying off debt. Going forward, IIIN should be well-fortified to withstand any bad surprises and continue to grow.

3) WORLD DOMINATION. They're doing what they said they'd do, by executing on their other two core strategies: achieving leadership positions in their markets and expanding their geographic footprint. Combine that with fiscal responsibility, and there's potential.

4) SECTOR IS DEPRESSED. At $9.29, IIIN is within $0.08 of its 52-week low. Construction is weak, of course, pending general economic recovery. When the pendulum swings back up, as it always does eventually, business will boom. It has to, because...

5) DEMAND IS ENDLESS. They make stuff that will need to be used by lots of big companies for the forseeable long-term future. If you like, there's a really boring sentence from Insteel's website that gives perspective: Insteel makes prestressed "concrete strand" and welded wire reinforcement, including concrete pipe reinforcement, engineered structural mesh and standard welded wire reinforcement. Their products are sold primarily to manufacturers of concrete products that are used in nonresidential construction.

There are downsides, sure. This pitch is not perfect; it's just a quick five-point lovefest, apparently. But I'm not talkin' quick bang-boom explosion here. This is a sit-and-ride. Hop on and watch the scenery slowly beautify.

NOW, these are just one person's thoughts. There are points and angles I haven't considered and things I've missed, I'm sure. I'm no expert. I could be totally wrong about this. But I'd be happy to read anyone's thoughts, even if filled with contempt for my ignorance. Please comment on the original blog post:
http://caps.fool.com/Blogs/mold-to-marble-getting-iiin/427774

Thanks for reading!

I agree with goldminingXpert ... the recently plummeting share price is now too low to resist! And on an incredibly basic level, the company's in a high supply/demand long-term business -- steel wire reinforcing products for concrete construction applications. Tell when the world will stop needing that.

Red Raider is Lord

The construction industry will get a kick....soon

A chance for real growth...if your willing to hold on for a while.

Fundamental analysis shows that this stock is highly undervalued, coupled with the decreasing price of oil and an economy that should rebound within the next 3-6 months, IIIN could double or triple its current price.

solid business, enough said about the financial strength. Steel is hardly used in home building but rather big construction project. if this economy gonna need to recover. the Government better invest into construction to start put some more liquidity back into the economy

small steel company with big upside. nice growth projections and no debt.

look at their ratios.... basically no debt. very SOLID business. only 20% in residential. cant construct anything without these guys. don't get suckered into trading on volatility, invest in this long term. high hopes for this, GTI, ICO and VIP

They make welded wire fabric for use as concrete reinforcement in the manufacture of concrete pipe, and for use as building mesh, and engineered structural mesh.

In addition they also make high carbon seven-wire strand that is used to transfer compression forces into precast concrete structures. steel wire reinforcing stuff used in construction projects, like rebar and wire mesh.

And the cool thing about this company is that 80% of the company's business is non-residential.

I liked the company's financials, very clean, with my very favorite being that the company had no debt. None, zero, zilch.

So based on the company's most recent 10-K dated 09/07, I added the stock to my watch list with a reasonable value estimate of $39.50, which put my buy target at $19.50, my first sell target at $38.50, and my close target at $41.50.

Again based on the company's latest 10-K from 09/07, the company has a PE of 9, a Return On Invested Capital of 20%, Free Cash Flow of $1.45, a Tangible Book Value of $7.86, and it pays a $0.12 per share annual dividend.

Based on a recent close of $11.36, the stock has first resistance at $11.74, a 3% increase from recent levels, second resistance at $16.43, a 45% increase from recent levels, and support at $10.00, a 12% decline from recent levels.

With all of that said, I believe that the stock has more upside potential than downside risk, so I'm adding it to my CAPS portfolio.

Wax

This "Looks Like" a trifecta! Value Company (Low forward P/E and EBITDA in the 4's), Buying back shares ($25MM announced today), in a strong-demand industry (Infrastructure).

Good Matrix

bullish for a few days

Low P/E, Hangs tough at support levels even with little interest, breaks out nicely when conditons warrent a move, building materials will always have a market.

Insteel Industries financials are excellent but since it's linked to the housing market it will wallow in the mud like the rest of the housing stocks.

although the company reported that the coming year might not be as good as this year, i still have high hopes for it. insteel is 'steel' in good shape and will remain profiitable.