The Appeal of Mohawk Carpet for Investors - Assignment Example

According to Kathleen Gallagher of the Milwaukee Journal Sentinal in a Christmas Day article 2006, carpet has dropped to 46% from 49% in sales of ALL floor coverings since '05. " People have to stand on something," said Haruki Toyama of Toyama Value Fund, in that recent article. Since this trend must have been apparent to the Mohawk Company a long time ago these folks have been moving into the tile and laminates end of floor coverings, hence their purchase and integration of the Belgian tile manufacturer mentioned.

Instead of a careful and slow-growing conservative company I see a concern poised to take advantage of lower transport costs than since the beginning of the Iraq war; along with integrated tile manufacture, to challenge Shaw's leading market share in this industry.  With the cost of oil projected to ease a little; as much as 7% if the futures market is to be believed, in addition to a drop in manufacturing costs ( oil is the main ingredient in polyurethane) profitability could be up also.

Some analyst predicts it could be a 120 dollar stock my midsummer for just these reasons and more. The savings would go to the bottom line most likely instead of pricing. If Management could convince shareholders of the wisdom of using the savings to lessen prices, then advertise the savings to their wholesale and retail customers, this might really put them is the lead over Shaw. Shaw has a 30% to 27 % lead in share at this time.