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Mohawk Industries (MHK) Showing Signs Of Being Strong And Under The Radar

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Mohawk Industries ( MHK) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Mohawk Industries as such a stock due to the following factors:

  • MHK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $163.1 million.
  • MHK is making at least a new 3-day high.
  • MHK has a PE ratio of 33.3.
  • MHK is mentioned 0.38 times per day on StockTwits.
  • MHK has not yet been mentioned on StockTwits today.
  • MHK is currently in the upper 20% of its 1-year range.
  • MHK is in the upper 35% of its 20-day range.
  • MHK is in the upper 45% of its 5-day range.
  • MHK is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in MHK with the Ticky from Trade-Ideas. See the FREE profile for MHK NOW at Trade-Ideas

More details on MHK:

Mohawk Industries, Inc., together with its subsidiaries, produces floor covering products for residential and commercial applications in the United States and for residential applications in Europe. The company operates through three segments: Mohawk, Dal-Tile, and Unilin. MHK has a PE ratio of 33.3. Currently there are 7 analysts that rate Mohawk Industries a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Mohawk Industries has been 776,100 shares per day over the past 30 days. Mohawk has a market cap of $9.4 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.33 and a short float of 2.6% with 1.02 days to cover. Shares are up 42.9% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Mohawk Industries as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 22.7%. Since the same quarter one year prior, revenues rose by 34.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MOHAWK INDUSTRIES INC has improved earnings per share by 11.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MOHAWK INDUSTRIES INC increased its bottom line by earning $3.60 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($6.24 versus $3.60).
  • Net operating cash flow has slightly increased to $152.86 million or 9.14% when compared to the same quarter last year. In addition, MOHAWK INDUSTRIES INC has also vastly surpassed the industry average cash flow growth rate of -63.30%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 61.63% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.

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