Today, May 19, 2022, Dow Jones is trading at ~31,289, the S&P 500 at ~3,878, and Nasdaq at ~11,482. With market uncertainty being the current status of equities, the keen investor needs to ask: what are some good companies to invest in?
Here at BigStock.io wanted to give you a good answer. Based on performance, price, and liquidity criteria, we searched and found the 4 best publicly traded companies you can buy right now.
Let’s take a look…
1. Builders FirstSource Inc (NYSE: BLDR)
Builders FirstSource Inc, incorporated in 1998 and headquartered in Dallas, Texas, is a building materials manufacturer and supplier.
The company provides structural and building products like factory-built roof and floor trusses, vinyl windows, custom millwork and trim, wall panels and stairs, and engineered wood. Builders FirstSource designs the products for each home individually and installs them themselves.
The company’s construction-related services consist of turn-key framing and shell construction, professional installation, etc.
As for its customers, they range from small custom homebuilders to large production builders.
Based on the 14 analysts’ 12-month median price target of $97 and the stock’s trading price, BLDR now has a 79.62% upside. The highest price target is $125 which represents a 131.48% upside and the lowest is $70 which represents a 29.62% upside.
The median and highest price targets are too optimistic in regards to short-term growth. The lowest price target is a very reasonable prediction, however.
Builders FirstSource is pretty cheap right now. Its P/E ratio was last observed as 6.3x and its P/B as 2.3x. This makes no sense if you consider the company’s profitability…
It generated an impressive 35% return on its equity and grew revenue and EPS by 132.4% and 218.8%, respectively. This is a phenomenal performance for such a big corporation.
Further, it has a D/E ratio of 1.23x which suggests a good margin for debt financing. On top of this, the company has very strong liquidity: its current assets were last reported as 1.8 times its current liabilities and its EBIT as 17x.
Source: BLDR Annual Report
2. Arrow Electronics Inc (NYSE: ARW)
Arrow Electronics, founded in 1935 and headquartered in Centennial, Colorado, is a global electronics distributor. It connects suppliers of semiconductors, IT solutions, and components to more than 180,000 small and midsize customers across 85 countries.
The company is the second-largest distributor of semiconductors in the world and the largest for North American chip distribution, partnering with one third of the global chip manufacturers.
Based on the 7 analysts’ 12-month median price target of $145 and the stock’s trading price, ARW now has a 30.57% upside. The highest price target is $158 which represents a 42.27% upside and the lowest is $126 which represents a 13.46% upside.
Both the median and the highest price target are reflective of the fundamentals and the growth prospects of the company. But the lowest price target seems too conservative.
Arrow Electronics had a good run last year. It generated a 20.7% return on its equity and grew revenue and EPS by 20.2% and 103.2%, respectively.
This performance looks even better in the light of valuation, however. The stock is now trading at 7.3 times its EPS and 1.2 times its book value.
If you manage a long-term portfolio, then this may be a good fit too. Last time, the company reported current assets as 1.4 times its current liabilities. On top of that, interest coverage was last observed as 11.9x.
Source: ARW Annual Report
3. Commercial Metals Co (NYSE: CMC)
Commercial Metals, founded in 1915 and headquartered in Irving, Texas, operates steel mills, metal recycling facilities and steel fabrication plants in the US and Poland.
The company mainly manufactures structural and rebar steel which are key product categories for the non-residential construction sector.
Based on the 8 analysts’ 12-month median price target of $44.5 and the stock’s trading price, CMC now has a 22.75% upside. The highest price target is $54 which represents a 48.96% upside and the lowest is $36 which represents a 0.68% downside.
The median price target seems conservative but could be an accurate prediction. The highest one seems reasonable too, albeit a bit optimistic. The downside suggested by the lowest price target makes it unreasonably bearish.
Commercial Metals is a great pick for several reasons.
First of all, the stock is currently trading at 10.7 times its EPS and 1.9 times its book value.
This came as a surprise to us when we examined the company’s performance last year. It generated an 18% return on its equity and grew its revenue and EPS by 22.9% and 46.3%, respectively.
Another good reason to invest in this stock for the years to come is its impressively strong liquidity. Its current ratio was last observed as 2.8x and its interest coverage as 11.7x.
Last, the company is conservatively financed with a D/E ratio of 1x.
Source: CMC Annual Report
4. Owens Corning (NYSE: OC)
Owens Corning Inc, founded in 1938 and headquartered in Toledo, Ohio, is an American company that develops and produces glass fiber that is utilized in composites and building materials.
It operates its business through 3 segments:
- CompositesIts fiberglass composites make thousands of products stronger, lighter, and more durable
- InsulationIts insulation products conserve energy and improve fire resistance, acoustics, and air quality in spaces where people live, play, and work
- RoofingIts roofing products and systems enhance the curb appeal of people’s houses and protect commercial buildings and houses alike
Based on the 17 analysts’ 12-month median price target of $102 and the stock’s trading price, OC now has a 33.78% upside. The highest price target is $159 which represents a 108.5% upside and the lowest is $77 which represents a 0.99% upside.
Here, the median price target is the most reasonable estimate. The lowest is far too bearing and the highest too bullish.
Owens Cornings’ fundamentals are more than solid…
First of all, if you are looking for a long-term idea, consider the company’s liquidity. Its current assets were last reported as 1.8 times its current liabilities and its EBIT as 11.5 times its interest expense.
Now, the stock is trading at 8 times its EPS and 1.8 times its book value. This is a bit too low for what the company’s performance was like last year. It generated a 22.9% return on its equity and grew revenue by 20.4% on a YoY basis.
All in all, if Owens Corning can keep its profitability trend, the current valuation makes the highest price target not far-fetched at all.
Source: OC Annual Report
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