Real Estate Bubble

[littlefish]

Definitely keep an eye on CUO. They have too many tailwinds working for them although there are a couple hurdles they are working on getting cleared. If things go well, they could be making a lot of money 2017-2018 compared to what they did last year and 2016 should be better than 2015 IMO.

It's quite different from AYSI in that while being owned by a single family, this is a well known and established family (Gidwitzes). The CEO's cousin ran for Governor in Chicago several years back.

They've bought shares at times and company has too, quite the opposite of the Kosteckis. They also have traded on the NYSE for well over a decade now and have the smallish buyback in place for down the road.

Who knows could be a momo if the materials sector continues upward like it has been and this starts hitting new highs.

They do take a good chunk off the top ('they' meaning CEO's salary/compensation mostly and lease a very nice place in Chicago away from ops) but when their margins and sales hit a certain point, that doesn't have nearly the impact it does when times are tough with earnings.

Last Q DDA was light so U might want to subtract about 5 cents EPS but still for slowish Q4 it was pretty impressive and this was all in advance of Colorado Springs's push for road repair/overlayment, bridge repair, etc... that will start showing later in 2016.

Give Colorado Springs a year or two of their new sales tax earmarked for roads and I think the company will be in a terrific spot. If Pueblo starts to recover, even better.
If not, they should have lots of work with CACS segment not to mention expanding fan coil production (and signed on a couple new customers for heater/furnaces). I'm suspecting they could boost CACS revs by 15% or more per year as things progress just from Colorado Springs projects with all the various work that will be coming online.

The 4 ready mix companies in Colorado Springs will be busy for several years IMO. One is a big competitor (MLM) but they've been working on expanding EBITDA upward too so not expecting much more price competition than what they already had. Concrete prices have been heading higher for several Qs now actually after a bit of lag (on margins) from higher cement prices.

The company has a share buyback with some left in it but they have too many potential growth drivers rt now and want to work on securing more aggregates tonnage and fan coil production expansion before focusing on buyback IMO. Pikeview is an older quarry that will probably be in reclamation phase around 2020.

It's not easy to collect shares unless you are patient and sometimes willing to creep the price up (what I did hitting the ask several times as I built position) but I think there's a window of time since Q1 is usually seasonally weaker and I think it is tremendously undervalued right now regardless of share structure. The markets have had a big run and may pull back so that may help give a small buying opportunity too but I think most of the sellers have been defeated now without moving price up from here.

I think they can earn net EPS $ in Q1 due to margin expansion but am totally guessing on that, a small loss would not surprise me nor upset me (they lost about $300K operationally last year Q1).

Q2 and Q3 2016 I think we start to get a small feel for the potential of what lies ahead the next several years.

Given what I think will be a multi-year expansion for CACS, that might be another chance to buy on weak Q1 but I would want to own some before then just in case they do well for a weak Q1 and if they mention anything about CACS backlog/guidance as Co Springs starts to get some concrete work going.

There's a lot of downside safety I think (with tangible book and increasing margins) and a lot of upside potential if people start looking at it more even with the Gidwitz family control of company shares structure.

Float is very thin but that's why now is the time to start nibbling and building position. They should have several years of good ahead of them after 9 years of really bad. Their cyclical segments have bottomed out and are heading upward even with the stock way down here, a terrific time to buy a micro on the cheap in cyclical industry segments that have blue sky ahead after years of punishment and attrition.


All IMO. Good luck.