10 Undervalued Stocks to Invest in According to Goldman Sachs

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

Forward P/E ratio: 11.14

Number of Hedge Fund Holders: 59

Builders FirstSource, Inc. (NYSE:BLDR) is a leading supplier of building materials, prefabricated components, and construction services for residential and commercial markets in the United States. The company offers a broad portfolio of products, including lumber, engineered wood, windows, doors, roofing, siding, insulation, and structural components such as roof and floor trusses. It also provides digital solutions, design software, and off-site manufacturing services to enhance efficiency in homebuilding and remodeling projects.

Builders FirstSource, Inc. (NYSE:BLDR) demonstrated resilience in Q4 and full year 2024, maintaining strong performance despite market challenges, achieving a mid-teens adjusted EBITDA margin and nearly 33% gross margin. The company invested over $75 million in value-added facilities, including opening 2 new truss manufacturing facilities, upgrading 19 truss facilities, and enhancing 13 millwork locations. Digital platform adoption showed progress with $134 million in incremental sales in 2024, with expectations of approximately $200 million in incremental sales for 2025. The company completed 13 acquisitions in 2024 with aggregate prior-year sales of roughly $420 million, demonstrating continued strategic expansion.

For 2025, Builders FirstSource, Inc. (NYSE:BLDR) projects net sales between $16.5 billion to $17.5 billion, with adjusted EBITDA expected between $1.9 billion to $2.3 billion, and adjusted EBITDA margin forecasted in the range of 11.5% to 13%. The company faces some headwinds, including continued weakness in multifamily construction and affordability challenges in single-family housing, but maintains a strong position with over 90% on-time and in-full delivery rates. The company’s fortress balance sheet and robust free cash flow generation, delivering $1.5 billion in free cash flow for 2024, positions it well for future growth opportunities. With a forward P/E ratio of 11.14, BLDR is one of Goldman Sachs’ undervalued stocks.