USG Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of wallboard manufacturer USG (NYS: USG) climbed as high as 14% on Wednesday after the company posted solid preliminary results for January and February.

So what: The huge year-over-year improvement -- $5.7 million in operating profit on sales of $516.9 million versus an operating loss of $46.8 million on sales of $446.9 million in 2011 -- is forcing analysts to raise their valuation estimates yet again. In fact, the shares are busting through their 52-week high on the news and are up a whopping 150% over the past six months alone.

Now what: Expect the short-term sales momentum to continue. First-quarter results won't be out until mid-April, but management fully expects that March's results will also reflect higher wallboard prices and expanding gross margins. Given USG's still-hefty debt load and red-hot stock price, however, Fools should proceed with a whole lot of caution.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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