Shares of Home Solutions (HSOA) are trading 5% higher at $7.34 after the company announced another major contract win this morning. We're not taking any action in this Alert, but want to put the news in context for you.
Home Solutions said that its Fireline Restoration subsidiary received a contract worth about $100 million to construct and develop a retail center and corporate office site in Hillsborough County, Fla. Fireline expects to complete $10 million in work this year and the rest of the project over a 30- to 48-month period.
This is the second $100 million contract award for the subsidiary in the past two weeks, and marks $280 million in contract wins for Home Solutions over the past three months. Also, it's significant that both $100 million deals are not related to the rebuilding of New Orleans, creating a diversified revenue stream that is less dependent on government funding and thus more predictable.
Home Solutions is firing on all cylinders, and we believe shares are headed to $10. New Orleans projects are just beginning to receive funding, which should result in additional contracts for the company. Also, the 2007 hurricane season is just around the corner, and an active season could result in our target price being very conservative. We maintain our One rating on Home Solutions.
Frank Curzio is a research associate at TheStreet.com.
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