Back

Latest Forum Topics / Others

Post Reply

Masonite - a US building materials company Post Reply Rate topic
i4value Member	02-Jun-2023 10:27        i4value About Contact  Quote this Post! Style: Fundamental   Mood: Yells: "i4value.asia"
x 0   x 0  Alert Admin	I have been hunting for cyclical companies in the US. Masonite (NYSE DOOR) is one that I covered recently.  This is a building materials company whose revenue is strongly linked to the US Housing Starts. When analysing cyclical companies, I look at their performance over the cycle. In the context of DOOR, it is the performance over the Housing Starts cycle.  My approach for investing in cyclical companies is to go in when its stock price is less than the intrinsic value. I get out when the market price is above the intrinsic value. The key then is determining the intrinsic value.  In the context of DOOR, I looked at 2 scenarios: Scenario 1 - Normalized one over the cycle. I assumed that the normalized revenue is when the Housing Starts = 1.5 million units. The other parameters were based on the average values from 2006 to 2022. Scenario 2 - Contrarian one where the long-term performance equals the average performance of 2019 to 2022. There were major acquisitions in 2018 and I assumed that this had changed the business fundamentals. My valuation is summarized in the Table  You can see that there is no margin of safety here. Of course if I had covered DOOR much earlier, I may have bought it. But this is a story for another day. I am a long-term value investor focusing on cyclical companies as they are easier to value. If want more value investing insights like the above, go to i4value.asia
Useful To Me  Not Useful To Me

                                                         First   1-1 of 1   Last