10 Most Undervalued Growth Stocks to Buy Now

5. Builders FirstSource, Inc. (NYSE:BLDR)

Forward P/E ratio: 10.64

Revenue CAGR last 5 years: 27.08%

Number of Hedge Fund Holders: 59

​Builders FirstSource, Inc. (NYSE:BLDR) is a supplier of building materials and manufactured components to professional homebuilders, remodelers, and commercial contractors in the US. The company’s large scale of operations makes it a key supplier to the construction sector, with the product portfolio including lumber, engineered wood, windows, doors, and roofing, among others. BLDR also provides value-added services such as design, estimating, and installation.

Builders FirstSource, Inc. (NYSE:BLDR) demonstrated resilience in 2024 with strong financial performance, achieving a mid-teens adjusted EBITDA margin and nearly 33% gross margin despite market challenges. The company invested over $75 million in value-added facilities, opened two new truss manufacturing facilities, upgraded 19 truss facilities, and enhanced 13 millwork locations. Digital platform adoption showed progress with $134 million in incremental sales in 2024, and the company expects additional incremental sales of approximately $200 million in 2025. The company also completed 13 acquisitions in 2024 with aggregate prior year sales of roughly $420 million, demonstrating continued execution of its growth strategy.

Looking ahead to 2025, Builders FirstSource, Inc. (NYSE:BLDR) faces headwinds from continued weakness in multifamily construction and affordability challenges in single-family housing. However, the company maintains a strong financial position with a healthy balance sheet, consistently strong cash flow generation, and multiple paths for value creation through organic growth, acquisitions, and share repurchases. Management forecasts net sales between $16.5 billion to $17.5 billion, representing a 4% YoY growth at the middle of the range. BLDR’s ability to grow even during soft construction markets, coupled with an affordable 10.64 forward P/E, makes it one of the most undervalued stocks on our list.