Knife River Corporation (KNF): A Bull Case Theory 

We came across a bullish thesis on Knife River Corporation on Valueinvestorsclub.com by Fuego.Suave. In this article, we will summarize the bulls’ thesis on KNF. Knife River Corporation’s share was trading at $78.88 as of September 9th. KNF’s trailing and forward P/E were 29.21 and 18.80 respectively according to Yahoo Finance.

KNF, a vertically integrated building materials company spun out of MDU Resources, offers an attractive long-term opportunity with a price target of $115/share, representing over 40% upside from the current ~$80/share. Since the spin, KNF has consistently improved margins through pricing power and cost discipline, executed accretive bolt-on deals, and maintained volume growth in line with peers despite challenging market conditions. The stock has underperformed significantly year-to-date, down 20% versus double-digit gains for peers such as ROAD, CRH, and GVA, driven largely by management commentary around weather-related project delays and Oregon’s stalled infrastructure bill.

This has compressed KNF’s multiple by 30%, with the market pricing in structural concerns that appear overstated. Fundamentally, KNF operates in localized oligopolies where permitting challenges limit new entrants, providing durable pricing power and margin expansion potential. The recent Strata acquisition offers further upside through synergies, while the board, supported by experienced operators like Tom Hill, remains focused on maximizing shareholder value.

At current levels, KNF presents a compelling 3:1 risk-reward. Even with near-term earnings risks, potential multiple expansion and steady high-single-digit EBITDA growth support 20%+ IRR over the medium term, with limited downside to ~$68/share. The company’s strong M&A optionality, both as acquirer and target, further de-risks the story, with potential takeout bids from peers or private equity providing embedded upside.

Catalysts include the upcoming Q2 print where expectations are already low, incremental margin gains from the EDGE initiative, eventual passage of Oregon infrastructure funding, and potential federal infrastructure support. Overall, KNF offers resilient cash generation, pricing power, and strategic optionality, making current weakness a buying opportunity.

Previously we covered a bullish thesis on Martin Marietta Materials, Inc. (MLM) by Durable Value Creators in September 2024, which highlighted the company’s strong aggregates business, pricing power, and long-term growth from infrastructure and construction demand. The company’s stock price has appreciated by approximately 12.43% since our coverage as these tailwinds supported performance. The thesis still stands as MLM focuses on aggregates. Fuego.Suave shares a similar view on industry dynamics but emphasizes KNF’s post-spin margin expansion, M&A upside, and rerating potential.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW

Disclosure: None.