Jim Cramer on Netflix and Other Stocks

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

Number of Hedge Fund Holders: 59

Builders FirstSource, Inc. (NYSE:BLDR) is a manufacturer and supplier of building materials and construction services across the United States. Its extensive product line features manufactured components that play a vital role in various construction projects. Discussing the company, Cramer talked about hurricanes leading to renovation and remodeling and said:

“Builders First Source has some of that… The stock’s up a great deal. I like the company. It sells at 16 times earnings. It’s good.”

In the second quarter, Builders FirstSource (NYSE:BLDR) completed nearly $1 billion worth of share repurchases. Following this, in August, the company authorized an additional repurchase of up to $1 billion of its outstanding common stock. Since initiating the buyback program in August 2021, it has successfully repurchased approximately 93 million shares, representing 45% of its total shares outstanding, with an average purchase price of $76.65 per share, amounting to a total expenditure of about $7.1 billion.

For the full year of 2024, Builders FirstSource (NYSE:BLDR) forecasts net sales to fall between $16.4 billion and $17.2 billion. The company expects to maintain a gross profit margin ranging from 31.5% to 32.5%. This projected performance is grounded in several assumptions regarding market conditions.

Within its operational regions, single-family housing starts are expected to see a modest increase in the low single digits, while multi-family starts are predicted to decline by 25% to 30%. The company also forecasts that its remodeling and repair segment will remain flat compared to the previous year. Additionally, recent acquisitions completed within the past twelve months are anticipated to contribute an incremental net sales growth of 1.5% to 2.0%.

ClearBridge Investments stated the following regarding Builders FirstSource, Inc. (NYSE:BLDR) in its Q3 2024 investor letter:

“The Strategy has historically been underweight industrials and consumer discretionary sectors, but positioning moves over the last year have helped close these gaps and provided several new contributors this quarter. Builders FirstSource, Inc. (NYSE:BLDR), a supplier of building products, rose strongly in the quarter on optimism that rate cuts will improve demand for single family and eventually multifamily residential construction. Cintas, a uniform rental and facilities services company, put up solid results as cross-selling and margin expansion efforts continue to bear fruit. Starbucks also provided a lift as the stock reacted positively to the naming of a new CEO, industry veteran Brian Niccol, who is expected to reinvigorate operations.”