PGT, Inc. (PGTI): Will the Upcoming Changes Help This Stock Continue Its Rally?

A secular trend towards impact resistant windows should also benefit sales. The fear of more frequent, more damaging storms is compelling consumers to replace old windows with the improved technology as well as use them in new construction. This trend should help PGT gain share in the market.

Similar companies

Another housing related stock that can benefit from the increase in new construction and remodels is Armstrong World Industries, Inc. (NYSE:AWI). Armstrong World Industries, Inc. (NYSE:AWI) is a producer of flooring and ceiling products. Its market cap is larger at $3.1 billion versus PGT’s $714 million. Armstrong World Industries, Inc. (NYSE:AWI) exposure is much wider, with less focus on the market in any state, as it sells globally. In comparison, PGT focuses heavily on one, deeply cyclical market, making it a riskier play but probably with more upside potential.

Another building materials company, Martin Marietta Materials, Inc. (NYSE:MLM), has also experienced a rally along with PGT. It is up 61% in the last year. Its revenue grew almost 20% from 2011 to 2012, although profit has remained flat due to tight margins for many of its products. Current expectations for future growth of Martin Marietta Materials, Inc. (NYSE:MLM) are quite high for a construction company, since the forward PE is at 25 times as against PGT’s 17.

Conclusion

PGT, Inc. (NASDAQ:PGTI) is an interesting stock at this point based on the secular trend towards impact resistant windows, and even more so, from a housing recovery in the Florida market.

The article Will the Upcoming Changes Help This Stock Continue Its Rally? originally appeared on Fool.com and is written by Mike Thiessen.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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