Caesarstone Cheap to Baron After 88% Increase: Israel OvernightVictoria Stilwell
Caesarstone Sdot-Yam Ltd.’s 30 percent discount to its peers is attracting Baron Capital Inc. as the Israeli maker of quartz-based countertops benefits from a recovery in the U.S. housing market.
Shares of Caesarstone jumped 9.1 percent to $20.71 yesterday in New York, the highest price since the Sdot Yam, Israel-based company began trading in the U.S. March 22. The advance led gains on the Bloomberg Israel-US Equity Index of the largest New York-traded Israeli stocks, which climbed to a five-week high. SodaStream International Ltd. rose the most this year, while Allot Communications Ltd. dropped after Clal Finance Batucha Brokerage Ltd. cut its price estimate.
Caesarstone reported better-than-expected fourth-quarter sales yesterday and projected 2013 revenue that exceeded analyst projections. The shares’ 88 percent rally since their New York debut sent valuations to 13.6 times estimated earnings, compared with an average multiple of 19.8 for companies on the Nasdaq Industrial Index. Housing starts in the U.S., the fastest growing market for Caesarstone, climbed 28.1 percent in 2012, the best year for the industry since 2008.
“It’s always hard to come in to a stock when it’s up so much, but it’s cheaper than its competitors in the space,” David Kirshenbaum, an analyst at Baron Capital, the fourth-largest holder of Caesarstone with about 1.2 million shares, said by phone yesterday from New York. “They are the innovator and market leader. And the U.S. is finally bouncing off the bottom of this cyclical housing downturn.”
The Bloomberg Israel-U.S. gauge rose 0.6 percent to 87.73 yesterday, the highest level since Jan. 2. Israel’s benchmark TA-25 Index gained 0.2 percent to 1,205.54 by 3:57 p.m. today.
Caesarstone forecast revenue will reach $330 million to $340 million in 2013, above the mean of four analysts’ estimates for $327 million. Sales during the last three months of 2012 reached $76.2 million, the company said, beating projections for $73.2 million.
Caesarstone is the second-best performing non-U.S. initial public offering, behind Vipshop Holdings Ltd., a Chinese online discount retailer that has returned 216 percent since March 22. The company will benefit as quartz countertops displace common materials such as granite and marble among consumers, Baron Capital’s Kirshenbaum said.
Home prices in 20 U.S. cities in November rose by the most in more than six years, fueled by mortgage rates near a record low. The S&P/Case-Shiller Index of property values increased 5.5 percent from November 2011, data showed Jan. 29.
Baron’s Growth Fund has returned 18.2 percent over the past year, beating 98 percent of its peers.
U.S. revenue for Caesarstone grew 45 percent in 2012 to $86.8 million, making it the company’s fastest growing region and second-biggest market after Australia, Chief Executive Officer Yosef Shiran said on a conference call yesterday.
The 941-member Nasdaq Industrial Index has risen 7 percent this year, trailing Caesarstone’s 30 percent advance.
SodaStream, the maker of home soda machines, rose 5.5 percent to $50.98 in the U.S. yesterday, the biggest gain since Dec. 17. The Airport City, Israel-based company’s flavor sachet sales were “solid” and its gas exchange business showed signs of acceleration, Jim Chartier, an analyst at Monness, Crespi, Hardt & Co., who rates the company buy, wrote in a client note yesterday.
Allot, the Israeli maker of products to track wireless traffic, slipped 1.1 percent to $13.96 in New York, the biggest slump in a week. The company’s shares in Tel Aviv added 0.5 percent to 51.91 shekels, or $14.06. Clal cut the Hod Hasharon, Israel-based company’s price estimate to $18 from $24 after fourth-quarter sales of $26.3 million missed the mean of 11 analysts’ estimates for $30 million.
Protalix BioTherapeutics Inc. slipped 2.8 percent to $5.98, following a 15 percent rally on Feb. 5 in the biggest advance since June 2009. Its shares traded in Tel Aviv today advanced 0.1 percent to 21.84 shekels, or $5.92.
Mellanox Technologies Ltd. rose 1 percent to $52.73 in the U.S. yesterday, advancing for the first time in three days. The Israeli stock added 0.8 percent to 192 shekels, or $52.16. The Israeli maker of software used to transfer and store data was rated a new buy at Janney Montgomery Scott LLC.