Just take the S out of the ticker and you'll have the sound I make every time I check in with this embattled construction materials maker.
I implored Fools to run away from this sector last year, and the demand for construction materials has only continued to tank since. Until you see the parking lots filling up at your local Lowe's
I know it's tempting to fish for bargains within such an unloved sector, but chasing these stocks is more like noodling for giant catfish in a bayou swamp: You're risking a nasty bite. All this talk of stabilization in the residential market is likely to boost the likes of D.R. Horton
Thanks in part to that generous infusion of capital from 34.6% stakeholder Warren Buffett, USG's liquidity position appears stable for the time being. With $495 million at its disposal, the company could conceivably absorb several more quarters similar to this second-quarter disaster before its viability as a going concern might again come into question. Buffett's commitment to the company suggests a welcome failsafe, but I maintain that investors have too many opportunities in more promising sectors to waste time and capital waiting for construction to recover.
More than 1,800 members of Motley Fool CAPS, including 554 All-Stars, expect four-star pick USG to outperform the S&P 500. Whether you think USG has the "eye of the tiger" or one foot in the grave, I know Fools would like to read your thoughts on this and other companies.
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly in the CAPS community under the user name TMFSinchiruna. He owns no shares in the companies mentioned. CEMEX is a Motley Fool Stock Advisor pick and a Global Gains selection, and the Fool owns shares of it. The Home Depot, Lowe's, and USG are Motley Fool Inside Value recommendations. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool's disclosure policy sings quintessential songs from the 1980s in the shower.