Below is a note written by CEO Keith McCullough on why we're adding Mohawk Industries (MHK) to the long side of Investing Ideas today:
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Staying with the Bullish @Hedgeye TREND call on US Housing, one of Jay Van Sciver's Best Ideas (Institutional Research product) is on sale today: Mohawk (MHK) is -2%. Here's an excerpt from Jay's summary thesis on the name: Early Is A Less Bad Form Of Wrong: For MHK, we had anticipated this inflection to occur in the 4Q18 to 1Q19 period, partly informed by an expectation that inflationary cost pressures and mortgage rate concerns would start to ease as broader economic growth slowed. MHK has deployed a ~$1.1 billion in capex above depreciation, long-term projects that come up to speed in the next year or two that address several deficiencies. MHK’s valuation is already ‘cheaper’ on some cyclically adjusted metrics than it was in the Global Financial Crisis, indicating that the share price reflects a reasonably dire outlook in what we view as a longer cyclical recovery. Buy on red, KM |