Bet On an Improving Building Industry With This Play

by Sam Collins | May 29, 2014 1:03 am

USG Corporation (USG[1]) — 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.

USG Stock Chart
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Chart Key[2]

  1. USG:
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