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Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:

Building for the Future by Dimitra Defotis

Summary: Wallboard maker USG Corp. (NYSE:USG) emerged from asbestos litigation-induced bankruptcy last year just as the housing market peaked. From $11.05 in 2005, USG hopes to make $2/share in 2007-8. While USG's share price halved commensurately to $48, other builder suppliers like American Standard (ASD), Masco (NYSE:MAS) and Owens-Corning (NYSE:OC) have weathered the housing slump better because USG is so strongly identified with wallboard. Gypsum market demand should fall 10% this year, and y/y prices were down 9%; USG controls 30% of the industry. Yet diversification efforts have made just 45% of USG's $5.8 billion revenues derive from new homes; the rest comes from sturdier residential remodeling (15%) and commercial construction (40%) markets. USG invested $900 million+ in faster production facilities, expanded product lines, and reduced wallboard output 20% to stem price declines -- but also used the drop in prices to acquire businesses like a lower-cost Mexican manufacturer and L&W Supply distributors. Warren Buffett's Berkshire Hathaway believes in USG's value; it owns 17% and counting. Barron's Bottom Line: Bulls say when the housing market turns EPS could triple, doubling shares back up to $90.

Related Links: USG Corp: Smart Acquisition for This Warren Buffett StockUSG: Hold On Tight For the UpsideTen Takeaways From Buffett's Annual Letter

Source: USG: Poised to Jump on a Housing Recovery - Barron's