Ply Gem Holdings, Inc. (PGEM, Financial) is a leading manufacturer of exterior building products, selling siding and windows and doors to both the new construction and repair/remodel channels. The business was built through acquisition in the mid-2000's and then went through a skillful downsizing as the housing market collapsed. The company recently came public to capitalize on the nascent housing recovery. We like the company's leadership position in its product lines and believe management has proved to be very capable. We expect sales and profits to grow materially based on the continued cyclical of recovery of residential housing construction (we expect starts to double from present levels), market share gains, new product introductions and acquisitions. We believe that cash flow can triple from its present base. Putting a reasonable multiple on that expected cash flow and adjusting the balance sheet to reflect projected debt levels drives a stock price that is a double from our cost.
From Ron Baron's second quarter 2013 commentary.
From Ron Baron's second quarter 2013 commentary.
