Cramer Calls Masco (MAS) Best-of-Breed Play on Housing Recovery
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On last night's Mad Money, Jim Cramer spotlighted what he calls "the best early-cycle play out there": Masco (NYSE: MAS).
A maker and installer of kitchen cabinets and plumbing products, as well as owner of the Behr paint brand, Cramer believes Masco is a play on the approaching bottom in the housing market. Cramer believes Masco is the best-of-breed way to play the early cycle as about 37% of its earnings come from new homes and 40% come from remodeling projects.
Although Masco has risen more than 35% since hitting a new 52-week low of $13.50 in mid-July, the President of Cramerica said he sees "only upside potential" and believes that the market has already priced in lower housing starts.
Turning to fundamentals, Cramer said he likes Masco's 4.9% dividend yield, which compensates patient investors to wait for the return of housing, as well as the company's stellar cash flow, which comes in at 3x earnings. Finally, Jim pointed out that Masco has about 33 million shares left under its buyback program, meaning that management will be purchasing shares if the price does drop.
With shares of Masco recently beaten down by analyst downgrades due to the current market turmoil, Cramer believes "Masco is exactly the kind of company investors should be looking for."
In pre-market trading, shares of Masco last traded at $18.10, up 3.8% from yesterday's close. While the broader markets are trading higher this morning on news that Warren Buffett has taken a $5 billion stake in Goldman Sachs (NYSE: GS), Masco's move this morning can still probably be attributed to Cramer's tout last night.
Masco Corporation manufactures, distributes, and installs home improvement and building products in North America and internationally.
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Comments
Bottom
Very much agreed with todays Cramer broadcast, that lower inventories are one sign to look for of a bottom. In addition to this and his perspective on indicative historical market declines, I would look for a relative flattening of US job losses. Hopefully banks will not lag or hesitate to hire contractors to remarket, manage and restore their own increasing inventory. I wonder what Cramer thinks of EXR, other storage companies.
recovery
Recovery. Thats funny. Bernake said "credit is the lifeblood of our economy". I thought it was trade. Idiots. Cramer: you might have to get a job.
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Its me again
builder on Feb 26, 2009 01:45 AMBernanke still is talking about credit being the way to the future. What a dolt. I can say what I want because nobody has read this for 6 months now. Better build 5 milion trailers and requisition farmland for the next winter Mr President, your best minds are failing you, or do you care how many live in tent cities with no bathrooms and no jobs.