In 2021 the name of the game may very well be finding post-pandemic investments. What’s bouncing back? How soon? How much?
"Many re-opening plays have run so far that there may not be huge remaining upside. Carpet tile manufacturer Interface is an exception to that idea."
Price notes Interface products are mainly used in commercial applications. Because of that, the company -- which posted consecutive all-time record results in 2017, 2018 and 2019 -- suffered a significant earnings decline in 2020. It is possible, but not certain, that EPS will dip a bit more this year, he said.
Shares that were changing hands at $17.60 in January 2020 plunged to $5.10 during the March 2020 COVID-19 panic crash. After rallying to north of $10 by June of 2020, TILE fell back once again. TILE was still available below $6 last October.
"I was a huge buyer of the shares during that stretch of time. Why? There's every reason to think TILE would be posting record earnings again as commercial building and remodeling activities get back to normal."
That process is already well underway, he says.
Price has pulled out Interface for two major reasons. First, he sees this as a stock and an industry at large that’s poised to do well in a post-reopening world. As he notes, Interface is not alone in bouncing back. Competitors such as Mohawk (MHK) - Get Mohawk Industries, Inc. (MHK) Report, Armstrong World Industries (AWI) - Get Armstrong World Industries, Inc. Report and Armstrong Flooring (AFI) - Get Armstrong Flooring, Inc. Report have done well also.
Second, many of the post-pandemic opportunities have started to evaporate as investors seek them out. Industrial flooring? That might well be a new one for hungry investors out there.