BlueLinx - the market is pricing this as a growth stock

2023-03-14

There is a strong correlation between $BlueLinx(BXC)$ revenue and US Housing Starts. Housing Starts is cyclical and BXC should be analyzed and valued as a cyclical company.

While the past 2 years’ performance has been record-breaking, it does not represent its performance over the cycle. The Housing Starts has started its downtrend and I would expect the revenue of BXC to follow suit. However, the market is not pricing BXC as a cyclical company.

The real valuation challenge is then what to use as the cyclical values. I have shown that if you use the historical averages, there is no margin of safety. But if you ignore the cyclical picture and use some projected values, you can have a margin of safety. The real question is whether it is appropriate to use such projected values for cyclical companies.

Looking at the current market price, I would say that the market is treating BXC as a growth stock.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

JuliusGoldsmith
2023-03-15
JuliusGoldsmith
$77 seems like a bottom now!
Dollydolly
2023-03-15
Dollydolly
I don't think it's a best choice for me, but thanks for sharing
DaveLewis
2023-03-15
DaveLewis
Thanks. I think BXC is not for investing, it's for trading.
JessieTheresa
2023-03-15
JessieTheresa
BXC would be a strong growth stock, I'll monitor :)
Juliaaa11
2023-03-15
Juliaaa11
will it keep dropping? I mean can we wait for another dips?
DUL FIARDI
2023-03-18
DUL FIARDI
k

Leave a comment

153

{"i18n":{"language":"en_US"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":9949548425,"tweetId":"9949548425","gmtCreate":1678785122468,"gmtModify":1678785127484,"author":{"id":4115195212423192,"idStr":"4115195212423192","authorId":4115195212423192,"authorIdStr":"4115195212423192","name":"i4value","avatar":"https://community-static.tradeup.com/news/d72fe7996384026cd60c7f305f6c3d04","vip":2,"userType":2,"introduction":"MBA, BSC (Eng) in Engineering & Business, Glasgow, UK","boolIsFan":false,"boolIsHead":false,"crmLevel":1,"crmLevelSwitch":1,"individualDisplayBadges":[],"fanSize":230,"starInvestorFlag":false},"themes":[],"images":[{"img":"https://community-static.tradeup.com/news/407b5d2c4bf2f9b311f3751336a5137e","width":"800","height":"2000"}],"coverImages":[{"img":"https://community-static.tradeup.com/news/407b5d2c4bf2f9b311f3751336a5137e","width":"800","height":"2000"}],"title":"BlueLinx - the market is pricing this as a growth stock","html":"<html><head></head><body>There is a strong correlation between <a href=\"https://ttm.financial/S/BXC\">$BlueLinx(BXC)$</a> revenue and US Housing Starts. Housing Starts is cyclical and BXC should be analyzed and valued as a cyclical company.\nWhile the past 2 years’ performance has been record-breaking, it does not represent its performance over the cycle. The Housing Starts has started its downtrend and I would expect the revenue of BXC to follow suit. However, the market is not pricing BXC as a cyclical company.\nThe real valuation challenge is then what to use as the cyclical values. I have shown that if you use the historical averages, there is no margin of safety. But if you ignore the cyclical picture and use some projected values, you can have a margin of safety. The real question is whether it is appropriate to use such projected values for cyclical companies. \nLooking at the current market price, I would say that the market is treating BXC as a growth stock.\n<img src=\"https://community-static.tradeup.com/news/407b5d2c4bf2f9b311f3751336a5137e\" tg-width=\"800\" tg-height=\"2000\">\n</body></html>","htmlText":"<html><head></head><body>There is a strong correlation between <a href=\"https://ttm.financial/S/BXC\">$BlueLinx(BXC)$</a> revenue and US Housing Starts. Housing Starts is cyclical and BXC should be analyzed and valued as a cyclical company.\nWhile the past 2 years’ performance has been record-breaking, it does not represent its performance over the cycle. The Housing Starts has started its downtrend and I would expect the revenue of BXC to follow suit. However, the market is not pricing BXC as a cyclical company.\nThe real valuation challenge is then what to use as the cyclical values. I have shown that if you use the historical averages, there is no margin of safety. But if you ignore the cyclical picture and use some projected values, you can have a margin of safety. The real question is whether it is appropriate to use such projected values for cyclical companies. \nLooking at the current market price, I would say that the market is treating BXC as a growth stock.\n<img src=\"https://community-static.tradeup.com/news/407b5d2c4bf2f9b311f3751336a5137e\" tg-width=\"800\" tg-height=\"2000\">\n</body></html>","text":"There is a strong correlation between $BlueLinx(BXC)$ revenue and US Housing Starts. Housing Starts is cyclical and BXC should be analyzed and valued as a cyclical company. While the past 2 years’ performance has been record-breaking, it does not represent its performance over the cycle. The Housing Starts has started its downtrend and I would expect the revenue of BXC to follow suit. However, the market is not pricing BXC as a cyclical company. The real valuation challenge is then what to use as the cyclical values. I have shown that if you use the historical averages, there is no margin of safety. But if you ignore the cyclical picture and use some projected values, you can have a margin of safety. The real question is whether it is appropriate to use such projected values for cyclical companies. Looking at the current market price, I would say that the market is treating BXC as a growth stock.","highlighted":2,"essential":2,"paper":2,"likeSize":153,"commentSize":23,"repostSize":3,"favoriteSize":0,"link":"https://ttm.financial/post/9949548425","repostId":0,"isVote":1,"tweetType":1,"viewCount":1843,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":["BXC"],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":753,"xxTargetLangEnum":"ORIG"},"commentList":[{"id":106045393,"commentId":"106045393","gmtCreate":1678883403451,"gmtModify":1678883406698,"authorId":9000000000000525,"author":{"id":9000000000000525,"idStr":"9000000000000525","authorId":9000000000000525,"name":"JuliusGoldsmith","avatar":"https://static.tigerbbs.com/aa7cf122cebf5a413a760f20bd5fed89","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9949548425,"objectIdStr":"9949548425","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"$77 seems like a bottom now!","text":"$77 seems like a bottom now!","html":"$77 seems like a bottom now!","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"valid","coins":0,"score":0,"disclaimerType":0},{"id":106045382,"commentId":"106045382","gmtCreate":1678883270867,"gmtModify":1678883277238,"authorId":9000000000000558,"author":{"id":9000000000000558,"idStr":"9000000000000558","authorId":9000000000000558,"name":"Dollydolly","avatar":"https://static.tigerbbs.com/2a3c9f1e4d056b8f2c66c22a8930b166","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9949548425,"objectIdStr":"9949548425","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"I don't think it's a best choice for me, but thanks for sharing","text":"I don't think it's a best choice for me, but thanks for sharing","html":"I don't think it's a best choice for me, but thanks for sharing","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"valid","coins":0,"score":0,"disclaimerType":0},{"id":106045423,"commentId":"106045423","gmtCreate":1678883594742,"gmtModify":1678883598103,"authorId":9000000000000636,"author":{"id":9000000000000636,"idStr":"9000000000000636","authorId":9000000000000636,"name":"DaveLewis","avatar":"https://static.tigerbbs.com/0f379c0439dbd36ed017761896cd91f0","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9949548425,"objectIdStr":"9949548425","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"Thanks. I think BXC is not for investing, it's for trading.","text":"Thanks. I think BXC is not for investing, it's for trading.","html":"Thanks. I think BXC is not for investing, it's for trading.","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"valid","coins":0,"score":0,"disclaimerType":0},{"id":106045400,"commentId":"106045400","gmtCreate":1678883475625,"gmtModify":1678883479118,"authorId":9000000000000538,"author":{"id":9000000000000538,"idStr":"9000000000000538","authorId":9000000000000538,"name":"JessieTheresa","avatar":"https://static.tigerbbs.com/aa7cf122cebf5a413a760f20bd5fed89","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9949548425,"objectIdStr":"9949548425","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"BXC would be a strong growth stock, I'll monitor :)","text":"BXC would be a strong growth stock, I'll monitor :)","html":"BXC would be a strong growth stock, I'll monitor :)","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"valid","coins":0,"score":0,"disclaimerType":0},{"id":106045392,"commentId":"106045392","gmtCreate":1678883350104,"gmtModify":1678883353967,"authorId":9000000000000527,"author":{"id":9000000000000527,"idStr":"9000000000000527","authorId":9000000000000527,"name":"Juliaaa11","avatar":"https://static.tigerbbs.com/0965d3709fcccd732467fba87aa4ea6e","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9949548425,"objectIdStr":"9949548425","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"will it keep dropping? I mean can we wait for another dips?","text":"will it keep dropping? I mean can we wait for another dips?","html":"will it keep dropping? I mean can we wait for another dips?","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"valid","coins":0,"score":0,"disclaimerType":0},{"id":106069429,"commentId":"106069429","gmtCreate":1679076432289,"gmtModify":1679076435557,"authorId":4129861887380392,"author":{"id":4129861887380392,"idStr":"4129861887380392","authorId":4129861887380392,"name":"DUL FIARDI","avatar":"https://community-static.tradeup.com/news/fc85237bc1f3cb25f9abc27ab191427a","vip":1,"currentWearingBadge":{"badgeId":"a83d7582f45846ffbccbce770ce65d84-1","templateUuid":"a83d7582f45846ffbccbce770ce65d84","name":"Real Trader","description":"Completed a transaction","bigImgUrl":"https://static.tigerbbs.com/2e08a1cc2087a1de93402c2c290fa65b","smallImgUrl":"https://static.tigerbbs.com/4504a6397ce1137932d56e5f4ce27166","grayImgUrl":"https://static.tigerbbs.com/4b22c79415b4cd6e3d8ebc4a0fa32604","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2022.12.21","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1100},"crmLevel":11,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":9949548425,"objectIdStr":"9949548425","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"k","text":"k","html":"k","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"invalid","coins":0,"score":0,"disclaimerType":0}],"isCommentEnd":false,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/9949548425"}