Welcome to the initial Idea Roundup! I’d like to make this more regular feature of the newsletter where I briefly cover a handful of potential equity ideas to spark conversation and further research. Be sure to leave a comment below to let me know what you think and if you have stocks you think are interesting!
Disclaimer: Of course, nothing here is investment advice. Please see full disclaimer at the end of the article.
Let’s get to it!
1. Eagle Materials EXP 0.00%↑
Eagle Materials is a concrete company with a $7 billion market cap and a focus on making a more sustainable, eco-friendly concrete. No matter where you stand on environmental policy, it’s hard to conclude that a less carbon-intensive concrete won’t have a ton of money thrown at it as countries scramble to hit their ever elusive emissions goals.
Before going further, a big shoutout to
for a recent writeup on this company. Check out their deeper dive below!One of the things that caught my eye about Eagle was the fact that 25% of shares outstanding have been repurchased by the company in the last five years.
In the last quarter the company repurchased $77 million of stock (representing 2.5% of outstanding shares). CFO Craig Kesler commented on the remaining authorization in the latest conference call, saying “[w]e have approximately 6.8 million shares remaining under our current repurchase authorization.” This constitutes another ~20% of the float with 34 million shares now outstanding.
2. Kyndryl KD 0.00%↑
When Kyndryl was spun out from IBM, things… did not go well. From north of $50 a share at the time of the spin-off, the stock endured a brutal fall to the $8 dollar range in mid-2022. Since October of 2022, however, the stock has staged a monster rally.
Today the stock sits ~11% off its analyst average price target of $23.75. Who says buying beaten down stocks with baggage doesn’t work out eventually?
3. Select Water WTTR 0.00%↑
Hat tip to
for sharing some info on this one. You can read his write-up here:This is an interesting cyclical play that’s more or less being left for dead by the market, valuation-wise. Select Water is a fracking water supplier to energy companies in the Permian Basin (which has had its share of bad news recently).
Despite the initial unattractiveness of the idea, this ~$900 million market cap company seems to be firing on all cylinders lately and is currently trading at 6.7x price to free cash flow.
4. Beazer Homes BZH 0.00%↑
With the prospect of recession being a mixed bag and a high possibility of interest rates falling in 2024, the surge of homebuilding activity (and windfall of profits to builders) of the last few years may not be over. With a footprint in 13 states, Beazer is a $955 million market cap company that has seen its stock ~3x since October 2022.
As a regional builder, the stock’s valuation trails some of the larger national builders (DH Horton DHI 0.00%↑ and Toll Brothers TOL 0.00%↑) by a good margin.
On a price to book basis the delta becomes even more stark—Beazer trades at 0.9x book value compared with DR Horton’s 2.3x. Perhaps most interesting is the fact that the builder is currently trading very, very near its net current asset value per share of $29.03 by my calculation as of this writing. For reference, the stock is trading now at $31 and change.
Thanks for reading! If you enjoyed this, please hit the like button and share with anyone who may be interested!
Disclaimer: Nothing here is investment advice. Do not make any financial decisions based on anything written in the above article. The writing above is purely a work of opinion. The author currently does not have any positions in these stocks. Consult a financial advisor before making any financial decisions.
Thanks for the mention, Steve! Now... the idea has to work!
You can improve visibility for this article. Tag your tickers. Hardly anyone uses the ticker search feature presently, but it's a chicken or the egg problem. To tag a ticker just put in a dollar sign followed by the ticker. Beware that the app won't show it, so list the actual ticker then do the tag.
"Amazon (AMZN) $AMZN is selling more crap."
On desktop and mobile web they will see both. The link created by the $AMZN doesn't work in the app. I've already reported this to substack.
Getting the ticker system in use is critical to Substack becoming a contender in the stock analysis space. This feature is so barely known that I only learned about it a couple weeks ago.