Bloomberg News

Mohawk, Stanley Works Rise on Housing Market Signals

February 01, 2007

Shares of homebuilder suppliers Mohawk Industries Inc. (MHK:US), Stanley Works and Georgia Gulf Corp. (GGC:US) climbed after the U.S. Federal Reserve said the housing market is stabilizing.

Mohawk, the biggest U.S. maker of hardwood floors, rose 3.8 percent today, giving the company its largest two-day increase in almost three years. Stanley Works, the biggest U.S. hand-tool maker, and paint retailer Sherwin-Williams Co. (SHW:US) each reached record highs. Georgia Gulf, the biggest North American maker of vinyl window frames, also advanced.

``We have a `Goldilocks' economy: not too hot, not too cold. That's good for homebuilding and remodeling,'' said Doug Asiello, senior analyst with Houston-based AIM Investments, which manages $149 billion, including Sherwin-Williams shares. ``The economy's humming along, but inflation's not getting out of hand.''

The Federal Reserve yesterday kept the benchmark U.S. interest rate at 5.25 percent, saying inflation is slowing. The central bank also said there were ``tentative'' signs that housing was beginning to stabilize.

Shares of Calhoun, Georgia-based Mohawk rose $3.15 to $85.57 at 2:38 p.m. in New York Stock Exchange trading today after advancing 5.4 percent yesterday. New Britain, Connecticut-based Stanley Works gained 74 cents to $58 while Cleveland-based Sherwin-Williams climbed 32 cents to $69.42. Atlanta-based Georgia Gulf increased 84 cents, or 4 percent, to $21.65.

Homebuilder suppliers ``have kind of had a stealth rally,'' said Keith Hughes, an analyst at Atlanta-based SunTrust Robinson Humphrey, who has a ``buy'' rating on Mohawk. ``More investors are seeing a bottom than in months.''

December new-home sales rose 4.8 percent to an annual pace of 1.12 million, the fastest since April, the U.S. Commerce Department said last week.

The Fed's preferred inflation gauge, which excludes food and energy costs, rose at a 2.1 percent annual pace in the fourth quarter, down from 2.2 percent in the third quarter, the Commerce Department said yesterday.

To contact the reporter on this story: Danny King in Los Angeles at dking19@bloomberg.net

To contact the editor responsible for this story: Michael Nol at mnol@bloomberg.net.


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Companies Mentioned

  • MHK
    (Mohawk Industries Inc)
    • $134.82 USD
    • -0.65
    • -0.48%
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