Glassmaker Gone Gangbusters

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Riddle me this, dear Fool: Which of these things is not like the others?

• Perini (NYSE: PCR)
• Pulte (NYSE: PHM)
• D.R. Horton (NYSE: DHI)
• Toll Brothers (NYSE: TOL)
• Fluor (NYSE: FLR)

If you guessed the last name on that list, because Cramer fave Fluor focuses on commercial construction rather than residential, then congratulations -- you're right. But to get extra credit, you had to also have recognized that this was a trick question in the first place: There are actually two companies on the list more tied to commercial than residential construction industry (Perini being the second). And you get extra extra credit if you recognize the other factor separating Fluor and Perini from the rest of the construction pack: While the residential builders named all experienced revenue drops in the latest quarter and are losing money, Fluor and Perini grew sales in the double digits and are making money.

Which brings us to the subject of this story -- glass products maker Apogee Enterprises (Nasdaq: APOG). If you recall, last quarter a lot of investors dumped shares of Apogee on one quarter's worth of lousy earnings news. Supposedly, shareholders bailed because management had flubbed three projects in Florida -- out of more than 100 ongoing building projects -- costing the company megabucks. Personally, though, I think a lot of people used last quarter's disappointment as an excuse to get out of a strong construction stock before the weakness in residential construction could infect Apogee's results.

Too soon
Well, to steal a surreal quote from Julia Roberts, and put it in an entirely unexpected context, let me just say: "Big mistake. Huge." You don't even need to read Apogee's earnings report, released Wednesday evening, to know how well this company is doing. The 17.8% rise in the stock price on Thursday tells all. 

If you do read the news, though, you'll learn that 2007 revenue grew a respectable 13%, the company tacked 140 basis points onto its operating margin, and as a result, grew its earnings from continuing operations a strong 33% to $1.49 per share. That's even more impressive, considering Apogee's ongoing efforts to expand capacity to meet demand -- free cash flow simply exploded, up nearly 280% year over year.

Foolish takeaway
Or in other words, commercial construction is not like residential construction. One may still be in the dumps, but commercial construction continues to boom, and stocks like Apogee along with it.