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 nations stocks traded in New York as the strongest U.S. housing market since 2007 bolsters the companys 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.

Theyve 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 Caesarstones 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 didnt 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 worlds 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 countrys 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.

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U.S. Housing Gains Spur 206% Caesarstone Rally: Israel Overnight