Opinions
Gordon Reid
Beacon Roofing Supply
BECN-Q
HOLD
Oct 03, 2018
Stock price when the opinion was issued
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2nd largest roofing company in North America. Analysis shows that roofing growth is going to be about 6% per year, over the next number of years. 60% of US homes were built prior to 1980, and if your roof needs replacing, you can only put it off for so long. Trading at a reasonable multiple.
Tends to be volatile, but over time has done quite well. The 2nd largest roofer in the US. There is new construction in the US, which has been somewhat sluggish, but there is also the replacement market. 60% of homes in the US were built before 1980, so they all need new roofs. This is a high beta stock. Still likes the company and the story.
He likes this company. They are 2nd in terms of the roofing business, to a private company. 60% of homes in the US were built before 1980, and it is just a matter of time before they have to spend to redo their roofs. A little lumpy in terms of its results. A lot of that has to do with weather. He believes there is more growth to come.
All the home builders have struggled in reaction to higher interest rates. But these rates are starting from a very low place and won't go very high. 2008 remains fresh in the minds of the Fed, so they are sensitive to the impact of rising rates. New home creation is still below trend in the U.S., so there's a lot of runway here.
He has been frustrated with it. While many housing related stocks are suffering given interest rates rising, he thinks that we are still in the very low interest rate environment. He thinks that people worry about changing level of rates, but that would throw off the housing market. His average client is exposed 0.25% to this name.