Sunday, February 14, 2016

Seeking Alpha: Headwaters Doing Better Than Its Stock

The general idea of investing, at least for the value/GARP crowd, is to find those stocks where the underlying performance of the company is better than the performance of the share price and avoid those where the opposite is true. I thought Headwaters (NYSE:HW) was getting a little expensive back in September, but the roughly 25% drop in the share price since then has me thinking that the market may have flipped on it to a point where the business is being underrated and undervalued.

Although the shares still don't quite work for me on a DCF basis (my fair value is closer to $15), I am willing at times to go with other valuation approaches like EV/EBITDA, and particularly when I think there are meaningful tailwinds that can help a business. I like Headwaters' leverage to what should be an improving construction market in 2016 and this may be a good time to start taking a closer look at this consolidator in building materials.

Follow this link to continue:
Headwaters Doing Better Than Its Stock

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