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Owens Corning's Identity Crisis as Business Model

If sky-high energy costs can drive people away from purchasing gas-guzzling SUVs – even family-friendly minivans – then there’s a good chance homeowners will be looking to save money on their utility bills, too.

Owens Corning, an insulation maker, could benefit from the move. Insulation is widely recognized as one of the cheapest ways to improve a home’s energy efficiency, Chairman and CEO Mike Thaman told Cramer Monday. Thaman sees the trend growing.

“We would expect in the future that not having an energy-efficient home will start to impact resale values,” Thaman said. “It will start to impact the ability for you to sell your house.”

But Owens Corning is more than just a housing play. The company is also in the composite materials business, making the fiberglass reinforcements that go into plastic. More specifically, OC supplies wind-tower makers – and Cramer can’t say enough about wind power – with the fiberglass needed to make those giant energy-generating blades. The wind-power industry expects 10% to 15% growth, Thaman said, but they have a history of underestimating their own business’ potential. That's good news for OC.

One division that’s not doing so well is Owens Corning’s roofing business. The sector as a whole has struggled since the great hurricanes of 2005. But Thaman pointed to some much-needed industry consolidation and the confidence he has in his franchise. Things finally seem to be turning around.

“We just needed to find an even keel,” the CEO said. “We said very clearly on our first quarter call [that] you’ll see profitability in the second quarter. We stand by that.”

“I am so glad I got behind your company,” Cramer told Thaman. Investors have “another great opportunity to buy the stock at $24.”


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