USG Corporation (USG) — This producer and distributor of building materials is North America’s largest manufacturer of gypsum wallboard. Thus, it is a direct play on the improving building industry here and abroad, since it recently agreed to form a global venture.
S&P has a 12-month price target of $40 based on cost-cutting and a more positive sales outlook. It expects operating EPS of $1.89 in 2014, up from $0.67 in 2013 and a loss of $1.12 in 2012.
On Friday, USG broke through a bearish resistance line that has been intact since late February. The break was preceded by two buy signals from our proprietary internal indicator, the Collins-Bollinger Reversal (CBR), and a selling climax in mid-April. There is light resistance at its 50-day moving average at $31.07.
Buy USG at the market with a trading target of $35. Investors are likely to realize S&P’s $40 target.