A story quite similar to The Valspar Corporation (NYSE:VAL) is that of PPG Industries, Inc. (NYSE:PPG). The giant coatings producer and the #2 global producer of paints and coatings, made an annual revenue of ~$15 billion in 2012.
PPG also makes a large chunk of its sales from paint and coatings. However, the end market of paints in this case is not only houses. It is also used in the automotive and aerospace industry. And we all know that both these industries are booming right now. Auto sales (SAAR) for April reached a five year high level. Similarly, companies like The Boeing Company (NYSE:BA) believe that the demand for commercial aircraft (small and fuel-efficient) is rising day by day.
Why I call PPG Industries, Inc. (NYSE:PPG) a story similar to The Valspar Corporation (NYSE:VAL) is because the stock is not a sell despite making a big chunk of sales through paint. Also, the company gets revenues from large flat glass and optical material, which helps it to diversify its revenue base.
My Foolish Take
Sherwin-Williams Company (NYSE:SHW) is definitely recommended as a sell given the weak forecast for the housing market. The Valspar Corporation (NYSE:VAL) seems to be a neutral call as the weakness in the paint market is balanced by its diversified revenue base. PPG Industries, Inc. (NYSE:PPG) is recommended as a buy given the growing end markets for its products.
The article Understanding Housing Recovery in the Language of Paint Industry originally appeared on Fool.com.
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