USG will be $40.00 by end of april. BUY...BUY...BUY
I pulled my cost for 1/2 inch drywall in 2006 and I just placed an order for 5/8 drywall today, it cost me less today for a heavier board. Cost have gone up since then and USG has added more debt. I agree there will be a housing boom in the near future but I have been building houses for the last 26 years and I can tell you we have never seen a 10 year uptrend in housing. Typically they run up for 6 years and fall back for 16 months.
Based on today's performance, USG is doing great, so are some of the homebuilders I am holding. For me the failure to reach profitability is my main problem with USG and there is a big hurdle to run 10 years of expansion in this business.
So . . . in 2006, could you get 1/2 inch? Most of the country had it on allocation. Capacity was over 35 billion board foot and it was on allocation. What part of supply and demand do you not understand?
Yes, you can buy drywall today for about 70% of its peak price and there's only a bit more than half being produced. What do you think you will pay for it when demand approached 30bsf and the supply has yet to reach 25?
Hint; shift demand curve to the right, see where it intersects supply, given that supply in the short term is fairly inelastic.
Good luck in your homebuilding endeavors but I'd stay out of manufacturing if I were you.