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Masco Corporation (MAS), Owens Corning (OC), Tenaris S.A. (ADR) (TS): Which of These Firms Can Grow Its Market Share?

Tenaris has buddied up with the right people

When we think of construction, we often picture commercial and residential buildings. However, Tenaris S.A. (ADR) (NYSE:TS) has a lock on pipeline development in the oil and gas industry. This company represents the type of firm that doesn’t need to battle as hard as Masco Corporation (NYSE:MAS) and Owens Corning (NYSE:OC), because it has developed close relationships with its clients. Tenaris has also exploited a market niche that is tough for competition to break into. It is an example of what the other two firms should strive for.

But the company still needs to ensure that it has enough cash ready to handle major projects when called upon. Without liquidity and inventory, the firm could miss opportunities for business. But the chart below shows investors have nothing to worry about.

TS Cash and Equivalents data by YCharts

With a combined $3.3 billion of inventory, and cash and equivalents, the firm is poised to maintain its market dominance in its industry.  That will allow it to capitalize on an influx in oil projects that are spurred on by the current high fuel price. The company is likely fully valued, with a P/B ratio above the industry average. It deserves that higher valuation because of its wide economic moat.

Final thoughts

Masco Corporation (NYSE:MAS) is the only company of these three that I think is underpriced. Its rationalization expenses, largely in the cabinet sector, improves its competitive advantage in that niche. That will allow it to build cash flow with which to continue its market dominance.

However, Owens Corning (NYSE:OC) lacks the liquid capital resources with which to grow or even maintain its market share in the insulation business.

Tenaris S.A. (ADR) (NYSE:TS) is best friends with many oil giants, likely because it has the inventories and cash ready to pursue any project that comes its way. But that doesn’t mean you should buy the stock. Its shareholders already know what it is capable of, and this has priced the stock to a point where it is already fully valued.

The article Which of These Firms Can Grow Its Market Share? originally appeared on and is written by Phillip Woolgar.

Phillip Woolgar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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