Building Products: The Pink Panther as a Leader?

NEW YORK (TheStreet)-Here's something we haven't seen in awhile. Impressive across-the-board performance at Owens Corning (OC), the producer of residential and commercial building materials, with a focus on the United States.  Its composites, insulation and roofing businesses all reported solid numbers. for the last couple of years, Owens Corning has had a tough time getting all three of its segments working.  So the ability for all of them to come together is momentous for the company and for the stock. And this allowed the company to initiate a quarterly $0.16 dividend payment--the first since 2000. Key is the turn in insulation, with the segment returning to profitability, something we've been awaiting, as this is a high margin business and very cyclical with high operating leverage. And even roofing posted strong numbers which reflects residential repair and remodel.

While the homebuilders align more strongly with rate changes, the building products group is a way to play cyclical improvement in construction and home prices improving--not to mention non-residential construction where we are seeing a turn.

The stock's 13% move up this morning reflects its strong positioning -- but also for the full group which had fallen out of favor. Keep an out on Fortune Brands Home & Security (FBHS), Stanley Black & Decker (SWK), Mohawk Industries (MHK), USG Corp (USG)--which has had a big run, Armstrong World Industries (AWI), and Lennox International (LII). Remember, we have also seen strength in the building materials space -- names like Vulcan Materials (VMC) and Martin Marietta (MLM)... where there is consolidation.

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