U.S. Housing Gains Spur 206% Caesarstone Rally: Israel Overnight
Caesarstone Sdot Yam Ltd. (CSTE), the Israeli maker of kitchen countertops, is leading gains among the nation’s stocks traded in New York as the strongest U.S. housing market since 2007 bolsters the company’s sales outlook.
Caesarstone has rallied 206 percent this year, putting the Bloomberg Israel-US Index on pace for its biggest annual advance since 2009. Taro Pharmaceutical Industries Ltd. (TARO) has more than doubled in 2013 while Alon Blue Square Israel Ltd. surged 77 percent.
Housing construction is picking up in the U.S., where Caesarstone gets 36 percent of its revenue, as builders broke ground on more homes in November than at any time in over five years. Analysts have boosted their 2014 sales forecast for the Sdot Yam, Israel-based company to $413 million from $348 million estimated for this year and $199 million in 2010, according to a Bloomberg survey.
“They’ve shown tremendous growth potential,” Josef Schuster, the founder of IPOX Schuster LLC, an IPO research firm, said in a telephone interview from Chicago Dec. 26. “It turns out this is a great growth stock.”
Caesarstone started trading on the Nasdaq stock market in March 2012 and had the second-best debut of any foreign company in the U.S. in 2012, after Chinese online retailer Vipshop Holdings Ltd. Shares of the company, whose quartz countertops are sold from Australia to the U.S., rose 0.1 percent last week, extending their quarterly gain to 5.7 percent.
Caesarstone is trading at 23 times estimated earnings, more than double its valuation at the beginning of the year and about 27 percent above the average of its global peers, according to data compiled by Bloomberg.
The U.S. represented Caesarstone’s largest and fastest growing market in the third quarter, with sales jumping 48 percent, Chief Executive Officer Yosef Shiran said on a Nov. 6 conference call with analysts.
Caesarstone didn’t respond to a telephone and e-mailed request for comment made after Israeli business hours.
In May, Caesarstone was named the exclusive provider of non-laminate countertops for the U.S. unit of Ikea Group, the world’s biggest home-furnishings retailer. The company last month announced a one-time dividend of 58 cents, its first payment on record.
Home prices have increased across the U.S. as investors drain markets of inventory and improving employment brings in more buyers. U.S. homes gained $1.9 trillion in value this year, the biggest jump since 2005, as the real estate market rebounded from the recession, Zillow Inc. said earlier this month. The country’s housing stock lost $6.3 trillion in value from 2007 through 2011 and has recovered 44 percent of that, according to the Seattle-based property-data firm.
Renewed interest from foreign investors in Israel’s technology sector and a strong economy relative to developed-market peers helped buoy Israeli stocks this year, Daniel Goldstein, head of sales at IBI-Israel Brokerage and Investments Ltd. in Tel Aviv, said by phone on Dec. 26.
Israel’s gross domestic product will grow 3.35 percent next year, compared with 2.6 percent in the U.S., 2.4 percent in the U.K. and a 1 percent expansion in the euro area, according to economist estimates compiled by Bloomberg.
The Bloomberg Israel-US Index gained 0.6 percent to 109.71 last week, extending its rally this year to 27 percent, the best performance since 2009, when it soared 83 percent. That compares with a 12 percent gain for Israel’s benchmark TA-25 Index. (TA-25) The gauge fell 1.3 percent, the most since Oct. 23, to 1,315.65 at the close today in Tel Aviv.
Taro, the Israeli company whose products include treatments for head lice and skin discoloration, jumped after Mumbai-based Sun Pharmaceutical Industries Ltd., its majority shareholder, said in February that it ended a bid to take over Taro at a discount. The Yakum, Israel-based company posted record sales for the quarter ended Sept. 30.
Blue Square, Israel’s second-largest supermarket operator, is on pace for the biggest annual gain on record after three years of declines. The Tel Aviv shares declined 2.2 percent to 14.24 shekels, or $4.08, today.
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