This has been a rough year for companies hoping to leverage a nascent
recovery in residential construction, residential remodel/repair work,
and light commercial construction. Ply Gem (NYSE:PGEM), Louisiana-Pacific (NYSE:LPX), and James Hardie (NYSE:JHX) have done worst than most, but even Armstrong World Industries (NYSE:AWI) and Mohawk (NYSE:MHK) have done pretty poorly. Against that backdrop, Headwaters' (NYSE:HW)
steep correction from the start of July is still unpleasant to behold,
but the stock still has a double-digit gain on a year-to-date basis.
I
think a large part of the problem with Headwaters' shares has been
inflated expectations, as the company continues to execute reasonably
well. I'd like to see better operating leverage, but management is still
committed to growing the business and absorbing some inefficiencies
along the way. I'm still not as bullish on Headwaters
as the ardent supporters who email me, but I do believe the shares have
sold off to a point where they once again look like an interesting play
on that "when, not if" recovery in residential recovery and a
longer-term effort to assemble a collection of quality specialty
building materials businesses.
Read more here:
Headwaters Continues To Build Out A Niche Materials Business
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