great buy, page-7

re: clark kent great buy Sometimes in this game you have to accept the nightmare scenarios.
Dont expect a return to high-teen PE's for Rinker any time soon.
This will have to wait for the next upturn in housing construction in the USA (although RIN are a bit insulated because of their geographic positioning in the high growth states of Florida, Nevada, Arizona and California)
Rinker have shrunk the balance sheet through special dividends and a capital return.
They will shrink it further through the buyback, but this will support the EPS, particularly as it they will be buying at relatively low prices (a good use for the mountains of cash they are generating).

But.
If the market decides that Rinkers EPS next year is not going to be $1.20 (company guidance) but $1.00 and that materials companies dont deserve a PE more than 9 at this stage of the cycle, all of a sudden you have a share price of $9.

Now chances are that this won't happen, but it would be foolish not to be prepared for this.
The trick at times like that is not to slash your wrists, but make the difficult decision to buy.

But for time being, things have brightened up.