We came across a bullish thesis on Core & Main, Inc. (nyse: CNM) on ValueinvestorsClub by yellow. In this article, we will summarize the thesis of Bulls on CNM. The company’s shares were negotiated at $ 48.00 when this thesis was published, compared to the closing price of $ 52.53 on April 25.
A natural gas pipeline that cuts through a rural landscape.
The CNM distributes water, wastewater, rainwater and fire protection products and related services to the United States. It has a market share of 20% in the United States in a very fragmented industry where 60% is covered by independents.
While the pipes explain most sales, raw margins can reach 5%. The profits are largely motivated by specialized products which offer a 5x gross margin more than the pipes. This is the reason why a 10% drop in PVC prices did not harm the profitability of CNM from 2022 to 2024. To put the figures in perspective, a 50% drop in PVC pipe income would reduce gross profits by only 3%. Consequently, concerns about the drop in revenues of pipes impacting the results do not hold.
2024 was a year during which the Infra of water projects had to be blocked due to the bad weather. This led to the reduction of advice for the 201024 financial year, which led to a 15% accident in the equity price on the same day. These projects are not of a discretionary nature and should resume in 2025. The distribution of $ 50 billion to the infrared water projects in the infrastructure and investment jobs is also unused due to bureaucratic delays. Funding should provide other rear winds to CNM activities in 2025.
High interest rates are also one of the reasons why project developers did not want to accelerate funding. With rate discounts at the corner of the street, we can expect more funding and better product demand in water projects. This has been hinted at the call of Ferguson’s profits whose navigation work division is a direct competitor of CNM.
CNM is expected to carry out an EBITDA of $ 1 billion in 2025, going to $ 1.5 billion in 2028. Using the Ferguson Multiple EV, the 2024-2028 EV is $ 23 to 23 billion, reflecting a stock market of $ 60 to 100. Based on the current price, the upward potential is between 14 and 90%.
While we recognize the potential of the CNM as an investment, our conviction lies in the conviction that certain AI actions are more promising to provide higher yields and do it within a shorter period. If you are looking for a more promising stock of AI than CNM but which is negotiated within 5 times its income, consult our report on the Stock ai the cheapest.
Read then: 8 Best actions of Large Douves to buy now And 30 most important AI stocks according to BlackRock.
Disclosure: None. This article was initially published by Insider Monkey.
