Installed Building Products, Inc. (NYSE:IBP) is one of the Best Housing Stocks to Buy According to Hedge Funds. On September 8, the company announced the acquisition of Carolina Precision Fibers ACP, LLC, doing business as Carolina Precision Fibers. With Installed Building Products, Inc. (NYSE:IBP)’s existing manufacturing operations at Advanced Fiber Technology in Bucyrus, Ohio, CPF enhances its access to an environmentally responsible and versatile product, which acts as an alternative to fiberglass insulation in residential applications as well as several innovative commercial and industrial applications.
Installed Building Products, Inc. (NYSE:IBP) opines that increasing the direct access to material used in installation service is beneficial to business operations and financial results. Including the previously announced acquisitions, CPF, and 3 smaller acquisitions, that have operationally combined with existing branches, Installed Building Products, Inc. (NYSE:IBP) acquired ~$39 million in annual revenue to date in 2025. While the company expects housing affordability to remain challenging in the near term, it remains confident about the long-term fundamentals of the broader US housing industry and the effectiveness of its growth-focused capital allocation strategy.
Giverny Capital Asset Management, LLC, an investment management company, recently published its Q4 2024 investor letter. Here is what the fund said:
“Installed Building Products, Inc. (NYSE:IBP), purchased in 2022. IBP is a prosaic business, installing fiberglass insulation into new homes, apartment buildings and commercial structures. The key to its success is that fiberglass is manufactured in super-heated furnaces that cannot be turned on and off efficiently. When a manufacturer opens a plant, it produces fiberglass 24 hours a day, 365 days a year. The producers need large customers to absorb those volumes, and they grant those buyers significant discounts. We believe IBP buys fiberglass for about 20% less than smaller customers do. Not even giant homebuilders like DR Horton or Pulte can command the discounts IBP receives, as IBP installs insulation in about 30% of all newly built US homes.
As a result, IBP says it can install insulation in a new home, including labor, for less than a homebuilder can buy the fiberglass. Further, most big homebuilders are trying to reduce their permanent workforce, moving more work to subcontractors. To complement its insulation offering, IBP has been acquiring other types of installers, including gutters, garage doors and shelving. These additional offerings allow homebuilders to consolidate their subcontractors, simplifying their operations. We believe CEO Jeff Edwards, whose family owns 16% of the stock, is building a terrific company that thrives by offering great value to homebuilder customers and by using scale benefits of procurement to reward shareholders. US home starts are low right now, and IBP trades for about 17x earnings, a modest multiple of mildly depressed earnings. Market cap: $5.5 billion.”
While we acknowledge the potential of IBP to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than IBP and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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