BLDR (Long) - lovely chart, lovely fundamentals

NYSE:BLDR   Builders FirstSource, Inc.
  • Builders FirstSource is in a robust financial situation and very cheaply valued (P/E = 4.6, P/S = 0.6)
  • Since the start of 2011, its revenue has tripled and earnings grew by almost 900%! Even last year when the market was puking, its earning grew by 60%
  • Their profitability is also good with ROE = 55.4% (Industry = 17.9%) and net profit margins at 12.5%
  • The stock is very much tied to the housing sector (which is also the main caveat), so if the housing market were to absolutely fall off the cliff (which is not completely unlikely), the stock would suffer. However, estimates already show BLDR's earnings falling in the next two years (meaning they have already been priced) and the stock is still rising, suggesting a lot of internal strength
  • Additionally, the managers announced a share buyback program and we might see them buying 10% of the public shares by the end of 2023, which would serve as a strong tailwind for the stock price
  • However, be mindful of the housing market (I suggest watching the chart of house builders - ticker: XHB)

  • Technicals look like from a textbook
  • On a weekly we can see a massive rounding base, suggesting a long-term accumulation; the break was not the cleanest, but the price action of the last few days suggest a follow-through in price
  • Relative strength to the overall industry is also pretty impressive and the stock clearly outperforms the rest of its industry

  • The stock has gone a bit further from the breakout point, but it pulled back today and it is yet not too far as for it to be unprofitable to enter
  • As a stop-loss, I would use the most recent low on a daily
  • The stock seems very suitable for a short-term trade as well as a longer term investment
  • As i mentioned before, be mindful of the housing market and commodity prices (lumber, copper etc.). The stock is correlated to both

Follow me for more analysis & Feel free to ask any questions you have, I am happy to help

If you like my content, Please leave a like, comment or a donation, it motivates me to keep producing ideas, thank you :)


The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.