We are long shares of a 40-year-old building supply company who is a leading distributor of building products in North America. This company’s revenues are dependent on housing starts and to a lesser extent the home remodeling market. This is a cyclical company — a style of company I’m not usually fond of — but there is some hidden potential. They were layered in debt coming out of the financial crisis in 2008.  But the company has been aggressively selling assets to reduce the debt load and has now reached what I believe to be a major inflection point in their turnaround.

We initially established our long position in August of 2016. It has been part of our “Buy on Pullback” Mock Portfolio 3.0 since October 2016.  On October 19, 2017 we also added it to our “Buy on Pullback” Mock Portfolio 6.0 on a selloff that was based on a non-dilutive financing. Shares are selling well below the valuation of its competitors and where it used to trade before the global recession.

	Potential Return – Multi-bagger
	Asset Class – Common equity
	Industry – Building Supplies
	Catalysts – Long term restructuring; Avoiding bankruptcy
	Market Cap –  Small cap

It appears that the company’s recent Q4 2017 results have attracted some insider purchases, the first wave of buys in a long time. The company also has a majority of its cost restructuring initiatives behind it, which have turned from a headwind to a tailwind. They have also now reported two straight quarters of top and bottom line improvements and they seem well-positioned to continue this trend in 2018. On the Q4 2017 conference call, management stated that they are in the third inning of their comeback story. Now that costs are under control, management can focus on top line growth.

More information on this stock can be found at Geo’s Pro Portal.

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