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Greg Herman
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Age: 22 Home Residence: Mount Holly, North Carolina Investing Philosophy: Extreme Distress Earnings Plays During Multi-Year Market Bottoms; I could care less about stocks that are 10%, 20%, or even 50% undervalued. I will wait an entire decade for the oppurtunity to buy 10, 20, and even 50... More
  • Value Line Standard Edition Issue 6 Commentary 0 comments
    Jan 1, 2011 11:21 AM | about stocks: CFI, NVR, IP

    BUILDING MATERIALS: Most of these companies are trading at bonehead valuations. In fact, more than half the companies are not even making money now and the debt load is quite high in this industry. No recommendations right now on valuation and I personally am still cautious on housing and commercial real estate because of government interference in these markets.

    ENGINEERING & CONSTRUCTION: Much better valuations than the previous categories, but no real steals. These valuations are in-line with historical norms, but provide little for what I'm looking for.

    FURNISHINGS/ HOME FURNISHINGS: Culp (NYSE:CFI) was the most interesting company I found in this industry. The valuation was decent at around 11X earnings. The company sports a debt level that can be more than covered than by less than one year's earning power. One of the most interesting traits about the company was that it has over 21% of shares held by insiders, with 75% held by Mr. Culp, the CEO. The company has a $150 Million market capitalization and will stay on my radar.

    HOMEBUILDING: NVR, Inc. (NYSE:NVR) is the best house in a bad neighborhood in this tattered industry. Some of these may prove to be levered speculative plays, but the debt levels in many of these names makes me weary and unwilling to take a closer look until more visibility and profitability returns.

    HOUSEHOLD PRODUCTS: This industry far and away has the best collection of outstanding businesses. None of the prices currently warrant a closer look, but if any of these companies goes on sale, I will be researching them in an instant.

    INVESTMENT COMPANIES: I don't invest in this industry because I feel that I can do a better job investing than these large, lumbering companies.

    PACKAGING & CONTAINER: Good metrics, but once again, nothing that is completely out of the ordinary creating any deep value buys.

    PAPER/ FOREST PRODUCTS: Very cyclical in nature and could provide some speculative situations. International Paper (NYSE:IP) was an amazing play from the Great Recession lows... interesting to look back at.

    POWER: Speculative industry with mostly solar companies. The technology in this industry is constantly changing, which causes problems for trying to find the best investments.

    RETAIL BUILDING SUPPLY: This industry is my second favorite of the issue. Many of these are great companies that will rarely trade at great values.

    Stocks: CFI, NVR, IP
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