5 Most Undervalued Industrial Stocks To Buy According To Hedge Funds

2. Builders FirstSource, Inc. (NYSE:BLDR)

Number of Hedge Fund Holders: 52

Building material company Builders FirstSource, Inc. (NYSE:BLDR) ranks second in our list of the most undervalued industrial stocks to buy according to hedge funds.

Of the over 940 hedge funds tracked by Insider Monkey, 52 hedge funds reported owning stakes in Builders FirstSource, Inc. (NYSE:BLDR).

In November, Builders FirstSource, Inc. (NYSE:BLDR) expanded its existing stock repurchase plan by $1 billion to a total of approximately $1.5 billion inclusive of the remaining outstanding authorization at the end of the third quarter of 2022.

Praetorian Capital made the following comment about Builders FirstSource, Inc. (NYSE:BLDR) in its Q3 2022 investor letter:

“Builders FirstSource, Inc. (NYSE:BLDR) produces and distributes building materials, primarily for the home building industry. It trades at a low-single digit cash flow multiple on recent earnings and is using that cash flow to rapidly repurchase shares. One could say that the low multiple is due to peak cyclical earnings. I take a different view and believe that we’re in the early stages of a long-term housing boom caused by migration to low tax states along with a catch-up phase as home construction rates were below trendline over the past decade. I believe that the US needs in excess of 1 million new single-family homes each year, just to provide for population growth, ignoring the other factors. As a result, this business does not appear to be at peak earnings; instead, I believe we are seeing a new baseline for earnings—though the earnings will be quite volatile—particularly if interest rates remain elevated or increase further.”