Beazer Homes USA Inc. (BZH)
Beazer Homes USA Inc. designs, builds and sells single family homes. Beazer Homes USA Inc. has a market cap of $253.2 million; its shares were traded at around $3.43 with and P/S ratio of 0.2.
Beazer Homes is a stock that fell from $80 to under $1 in about three years. In the last five years it fell 92.69%. The absurdly low price and positive free cash flow make it a good value stock candidate. It attracted two gurus in the first quarter – David Tepper and Arnold Schneider. David Tepper bought 1,367,679 shares at an average price of $5.11, and the price has fallen approximately 33% since then.
The home builder owns operations in 16 states across the country and designs homes that a variety of price points to appeal to a range of buyers.
The company reported second quarter results on May 3, 2011. It sold 1,194 homes, a 121.1% increase from the first quarter and a 9% increase from the second quarter of 2009. The statistic was a 26.7% decrease from the second quarter of 2010, but the company believes sales were temporarily inflated by First Time Home Buyers’ Tax Credit that year. Regardless of the reason, the stock fell quite a bit on the news.
Kb Homes (NYSE:KBH)
KB Home is a builder of single-family homes with domestic operations in several western states, and international operations in France. Kb Home has a market cap of $845.6 million; its shares were traded at around $11.83 with and P/S ratio of 0.5. The dividend yield of Kb Home stocks is 2.3%.
David Tepper bought 1,388,900 shares of Kb Homes in first quarter 2011 at an average price per share of $14.06. Since then, the stock has fallen approximately 16%. Like Beazer, Kb was once a thriving company with a stock price over $80 that fell to the single digits amid the housing crisis.
In the first quarter 2011, Kb Homes sales dipped to 949 homes from 1,329 in the same quarter 2010. The company also cited the federal homebuilder tax credit as a reason for the inflated 2010 sales. The average selling price for each home increased to $205,700 from $197,700 in 2010, while the profit margin decreased to 12.6% from 13.7% in 2010.
The company has cash of $857 million on its balance sheet, and debt balance of $1.7 billion, decreased by $73.8 million from Nov. 30, 2010, due to repayment of secured debt. Free cash flow for the company was positive since 2006, but it had a loss of $134 million in 2010.
American Airlines (AMR)
AMR’s operations fall almost entirely in the airline industry. AMR has a market cap of $1.92 billion; its shares were traded at around $5.75 with and P/S ratio of 0.1.
David Tepper sold out of his stake in AMR in the second quarter of 2008 and began buying again in the fourth quarter 2009 when the stock fell to an average price of $6.76. In the first quarter of 2011 he bought 1,145,841 shares at an average price of $7.17, bringing his stake to a total of 5,799,104 shares. Since then the stock price has declined 20%.
AMR carried the most passengers in 2009, but fell to second place behind Delta in 2010, while its number of passengers increased 4.3%, according to the Bureau of Transportation Statistics. Overall in the airline industry, the number of passengers was up 2.1% in 2010 over 2009, and the number of flights fell 0.8% from 2009 to 2010. The airline has been losing money since 2008, and lost 717 million in 2010. It has cash of almost $5 billion and long-term liabilities and debt of almost $30 billion. In the first quarter 2010, it had a net loss of $436 million, improved slightly from a net loss of $505 million in the first quarter 2010.
The company blames the losses in part on high fuel prices, as it paid $351 million more for jet fuel in the first quarter 2011 than it would have paid at first-quarter 2010 prices. But crude oil prices are currently declining as the International Energy Agency (IEA) announced today that its members would release 60 million barrels from its strategic oil reserves, which is good news for airlines. American Airlines stock rose 5.57% on Thursday when the news was announced.
Delta Airlines (NYSE:DAL)
Delta is America's fastest growing international carrier. Delta Air Lines has a market cap of $7.81 billion; its shares were traded at around $9.59 with a P/E ratio of 6 and P/S ratio of 0.3.
Delta’s stock has fallen 21.48% over the last year and 21.22% year to date. David Tepper added 2,035,993 shares to his Delta stake in the first quarter 2011, bringing his total shares to 3,592,656. He paid an average price of $11.28 per share, and the stock has declined 15.4% since then.
Delta Airlines had the most passengers of any airline in 2010, increasing the number by 63.7 percent from 2009. In May 2011, total traffic increased 2.2% from May 2010. The company had free cash flow of $1.5 billion, up from $277 million in 2009. It has long-term liabilities and debt of $42.29 billion and cash of about $4 billion.
In response to higher fuel costs in the first quarter 2011, Delta raised its domestic fares and international fare surcharges, reduced its capacity for the second half of 2011, made plans to retire 130 of its least efficient aircraft, reposition its fuel hedge portfolio and reduced planned capital expenditures.
Customer satisfaction with Delta Airlines dropped 9.7% to a score of 56 from 62% last year, reports the American Customer Satisfaction Index. Delta’s stock also rose today 3.65% on news of increased oil on the market.
You can find more Bargain Candidates of David Tepper or any other guru that we track at GuruFocus in our newly released GuruFolio Report. Premium members can download these reports for free; non-members can buy them for $9.99 per report.