Berkshire’s Top Performing Major Holding of 2012: USG Corporation (USG)

The improvement in 2012 from 2011 levels drove the shares higher in 2012. That said, the stock has stagnated in 2013, up just under 2%, and been a laggard versus the overall market. The Street has become concerned that housing starts will flatten out as in the following chart.   This could mean a recovery in earnings remains at USG is further off than thought a few months ago.

Conclusion

USG Corporation (NYSE:USG) has been a great stock to play the recovery in housing and commercial construction but the difficult part was timing the recovery. If housing starts do flatten out, it would push out the expected timing of a recovery and, therefore, lower the present value of the future earnings.  This could have an adverse effect of the stock price of USG. That said, for a patient investor that can live with a flat performance from USG’s stock in 2013, the rewards could more than make up for it in future years.  This kind of patience is what historically delivers market beating returns for investors like Warren Buffett.

The article Berkshire’s Top Performing Major Holding of 2012 originally appeared on Fool.com and is written by Mike Thiessen.

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