Mohawk Industries Remains a Buy Following 42% YTD Gain

Mohawk Industries (MHK) is one of the world’s top flooring product manufacturers. MHK’s flooring is used in both residential homes and commercial properties. The company also markets and distributes ceramic tile as well as natural stone and wood.

MHK has climbed $12 in one month alone. The stock was priced at $92 in late October of 2020. MHK has steadily increased ever since, climbing to $134 by late November, $182 by late February, and its current price of $195 as of late April.

Headquartered in Calhoun, GA, MHK does business in three distinct segments: Flooring North America, Global Ceramic, and Rest of the World Flooring. It is particularly interesting to note more than one-third of MHK’s sales stem from the company’s global ceramic business. Let’s take a look at MHK to determine just how high this stock might go.

MHK Points of Note

MHK has a reasonable forward P/E ratio of 17.01. This moderate forward P/E ratio is all the more appealing considering the stock is trading merely $11 below its 52-week high of $206.20. The stock’s 52-week low is $67.79.

Ceramic tile, laminate flooring, and natural stone are all in demand thanks to the housing boom. Home construction and sales are soaring in the United States and also in the majority of the rest of the developed world, helping the likes of MHK all the more.

Though the company encountered some legal trouble in the summer of 2020, the concerns over the potential fallout from a civil lawsuit and Securities and Exchange Commission investigation have not steered investors away from this high-flying stock. Take a look at MHK’s chart across the prior months and even the prior year and you will find it has had quite the epic upward run.

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The pressing question is whether building supplies manufacturers such as MHK will continue to climb after their massive jump throughout 2020. Indeed, there is a good chance these stocks will move even higher in the months ahead as consumer confidence increases and homeowners continue to spend for home improvements as opposed to social experiences. There is the potential for consumers to gradually shift their spending back to outdoor events including travel in the quarters ahead yet it will take some time for the masses to be vaccinated and feel comfortable in the presence of others at concerts, sporting events, exotic travel destinations, etc.

The Analysts’ Take on MHK

The analysts have established a target price of $220 for MHK. Of the 13 analysts who have issued recommendations on MHK, two consider it a Strong Buy, five consider it a Buy, and six consider it a Hold. No analysts consider MHK a Sell or Strong Sell.

MHK POWR Ratings

MHK has a B overall POWR Rating meaning it is a Buy. The stock has B ratings in the Momentum, Quality, and Sentiment components of the POWR Ratings. If you are curious as to how MHK fares in the Value, Growth, and Stability components of the POWR Ratings, you can find out by clicking here.

Of the 64 publicly traded companies in the Home Improvement & Goods space, MHK is ranked 11th. As a whole, this sector of the economy has an A POWR Ratings grade. Investors can learn more about the stocks in the Home Improvement & Goods space by clicking here.

MHK is Still a Buy

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MHK’s stellar POWR Ratings combined with an uptick in the construction of new homes and renovation of existing homes bodes well for the stock’s future. Add in the rebounding economy that is emerging from a trough following the year and investors have all the more reason to be bullish about MHK. Keep in mind, most people are still hesitant to travel, spend time in hotels and socialize in large groups of people, meaning more money will be spent on home improvement in the months ahead. MHK is poised to benefit from this trend, providing that many more flooring products to both consumers and businesses alike.

MHK shares were trading at $198.76 per share on Wednesday morning, up $2.71 (+1.38%). Year-to-date, MHK has gained 41.01%, versus a 10.94% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More…

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