1. Builders FirstSource Inc. (NYSE:BLDR)
Market Capitalization as of April 25: $13.8 billion
Number of Hedge Fund Holders: 59
Builders FirstSource Inc. (NYSE:BLDR) manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, subcontractors, remodelers, and consumers. It offers manufactured products, such as wood floor & roof trusses, floor trusses, wall panels, stairs, and engineered wood products.
While Builders FirstSource operates across various product categories, its strategic emphasis and investments lie in the value-added products and services. In 2024, the company invested more than $75 million in expanding its value-added capabilities. This included the opening of 2 new truss manufacturing facilities, upgrades to 19 truss facilities, and enhancements to 13 millwork locations.
The success of this is evident in the 8% year-over-year increase in install sales in 2024. In 2024, Builders FirstSource Inc. (NYSE:BLDR) achieved $134 million in incremental digital sales despite a challenging market. The company now projects ~$200 million in additional incremental digital sales in 2025 from wallet share expansions and new customer acquisitions. On February 23, Keith Hughes from Truist Financial maintained a Buy rating on the stock, with a price target of $180.
Giverny Capital Asset Management recently initiated a position in the company and stated the following regarding Builders FirstSource Inc. (NYSE:BLDR) in its Q1 2025 investor letter:
“At the end of the quarter, we established a position in Builders FirstSource, Inc. (NYSE:BLDR), a building products distributor. We bought stock around $126 per share, while Wall Street analysts believe the company should earn nearly $10 per share this year. That feels like a good price for a company of this caliber.
Builders is a key support system for the nation’s homebuilders. It carries a wide range of products like lumber, millwork, windows and prefabricated components. Increasingly, it provides homebuilders with value-added services that help them build homes with less labor. For example, Builders can frame walls of a home at a central location and deliver panels to a job site for quick assembly. This reduces both labor and lumber waste on the job site and improves the home’s structural integrity. The US is likely to have long-term shortages of construction labor, so this off-site assembly creates considerable value and should become a common way to fabricate homes.
Builders is by far the largest value-added distributor with 590 branches around the country. It has procurement clout with lumber mills and others, and the sprawling branch network means it usually has lower freight costs to deliver materials to a job site…” (Click here to read the full text)
While we acknowledge the growth potential of Builders FirstSource Inc. (NYSE:BLDR), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BLDR but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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