Headwaters quarterly conference call
I just listened to the Headwaters (HW: 10.74 0.00 0.00%) 2008 Q1 conference call. Revenues and profits were down due to the previously discussed wind down of their tax advantaged clean energy business (the tax credits have basically ceased).
The other businesses of the company appear poised for strong future growth and I am still positive on the company as a component of my 20 Stock Portfolio. Here are a couple of thoughts/notes:
- Building materials are maintaining profits in spite of housing downturn. Combination of being in a better market area (Texas), new product lines, increased efficiencies, and environmentally responsible products are maintaining sales in this area. Profit growth should be exponential when house building turns up.
- Coal cleaning business, which is considered the replacement for discontinued alt. energy business, should start generating significant revenues in 2008. Long term prospects are excellent.
- Other businesses: HCAT, ethanol and hydrogen peroxide production have significant future profit potential. Currently they do not provide meaningful bottom line results.
- When asked if a U.S. recession would affect business, the CEO responded that their building materials were already in a recession and their other business provided goods/services with strong demand despite the overall economy.
I added this stock to the 20 Stock Portfolio as a company with meaningful turn-around prospects. I think those prospects still exist, and this stock should provide excellent returns over the next couple of years.
Note: I currently do not have a position in HW.
Filed Under 20 Stocks, GrowthComments
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