Mr. Marcuse: Right now our primary focus is on roofing, and paints and coatings. In the commercial roofing space, we cover Carlisle Co., and we also cover a roofing distributor, Beacon Roofing Supply. The paint companies we cover are Valspar, RPM, PPG and Masco, which includes several different building products, but also they own Behr Paint.
TWST: Have the companies in your coverage universe been hit by the economic problems that have impacted the sector?
Mr. Marcuse: The sector as a whole traded lower with the market, including paint and roofing stocks. In 2008 and early 2009, Sherwin-Williams actually held up a little bit stronger than people thought. Most of the coating companies came back pretty sharply due to the variable cost structure versus a pure manufacturing company. For coating companies, when raw materials went down and pricing held steady, you saw margin expansion, which helped earnings in 2009 come in higher than consensus expectations. For a distributor like Beacon, even though new construction has been a challenge, the replacement aspect of the industry was a real benefit to the company and helped its earnings.
Tickers included in this excerpt: BECN, BRDCY, CSL, LOW, MAS, OC, PPG, RPM, SHW, VAL
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