That, combined with a chronically weak NSW housing market, has seen the company's share price hit multi-year lows. But Boral doesn't just rely on housing demand to make money - the company is also exposed to the boom in infrastructure spending, most notably in Australia.

Boral is an integrated construction materials and building products company. Its main geographic presence is in Australia, which represents 75 per cent of total revenue. Boral also has operations in the US and Asia.

Boral's business model is quite simple. The company's quarry assets are the source of its raw materials - hard rock, sand and gravel, limestone and shale, and clay. These are processed into cement, concrete, asphalt and bricks for use in road infrastructure and housing construction. Boral also owns a fleet of about 400 vehicles, providing transport and logistics solutions.

The outlook Boral's prospects are mixed. The company relies heavily on the NSW housing market, which remains a basket case in terms of bringing new supply to market. Housing starts have fallen below expected levels and have forced Boral to mothball some brick manufacturing plants in the state.

There is also evidence that the US housing downturn will be particularly severe and, with a glut of housing in key regions, the normal cyclical bounce back may be some time away.

On a positive note, Boral's exposure to the booming infrastructure market should offset housing-related weakness. Boral supplies aggregates (rocks, sand etc), cement and concrete for new roads and construction projects. For example, the company had a hand in Melbourne's huge EastLink project. With politicians showing no sign of doing any intelligent long-term public transport planning, more road infrastructure looks certain.

The key for Boral in this area will be pricing power. Boral is in some ways a miner (it digs rocks out of the ground) and costs are rising strongly in this area. Passing these costs on is obviously crucial for maintaining profit margins. Price Boral is a cyclical company, which is clearly demonstrated by the company's erratic share price performance over the past five years. In February this year Boral hit a low - below $5.50 - and has since rallied back to above $6.

We anticipate further volatility in the months ahead as uncertainty over the timing of the next cyclical upswing continues.

Worth buying? Boral has a very strong position in its markets but the capital intensity of the business means the company struggles to generate a healthy return on equity.

In downturns, the return on equity dips to single digits. Given the cyclical nature of the stock, Boral is best purchased in times such as these, although the ongoing credit crisis presents a fly in the ointment.

Tighter credit and indebted household sectors in Australia and the US suggest the next upswing will be far from robust so we feel the risk-reward characteristics are not strong enough to warrant buying around current levels.