Your thoughts on Adentra (ADEN) and Domain Building Materials (DBM)

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At this point in time with North America needing more housing in a big way, do yo think either or both of these companies make a decent investment as a small part (1-2%) of an overall much less cyclical portfolio? I will be retiring in about 7 years and could re-think at that point their place in my portfolio.
Thanks!

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Asked on October 4, 2024 10:26 am
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I'm bullish on this area of the market as well but I've really struggled to find a company that is worth the time to invest in. Margins are relatively thin and growth is slowing coming out of the pandemic.

Doman's free cash flow generation was really only worth looking at during the lockdown COVID situation (2020-2022). My concerns here is that that type of housing market euphoria is highly, highly unlikely to be replicated ever.

These are not companies I"d ever buy and hold for the long-term. Their business models, razor thin margins etc don't really fit into my criteria for something I'd be comfortable buying and forgetting about.

However, I do see where you're coming from in terms of the possibility of them going up in the short/mid term because of the massive shortage of housing we have here in North America. It is certainly a thesis that could easily come true.

Have you considered possibly mitigating the risk a bit in terms of going with an ETF over selecting a couple individual equities? The iShares US Home Construction ETF (ITB) is one that has garnered a lot of attention as of late.

It trades in USD unfortunately, but is one you could look at to get exposure to 50~ homebuilding companies in the US.

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Posted by Dan Kent
Answered on October 7, 2024 8:32 am
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Thanks Dan. I have a small position in Adentra that is currently doing ok. It isn't something I will worry about too much if it begins to tank at some point in the future; I can get out before it loses much value. Now, I simply won't be adding to it. I will be looking at ITB as you suggest and will likely buy a small amount in November if things still look good. Thanks Again!
(c-ras@sympatico.ca at October 9, 2024 8:21 am)