Inside Wall Street
A WALL-TO-WALL PURE PLAY
With the economy and housing starting to perk up, the demand for high-priced patterned carpets is also coming to life. Looking for a pure stock play in patterned carpets, one savvy money manager has come up with a small company that doesn't make carpets at all: Tapistron International, maker of a patented computerized carpetmaking machine that blends high tufting speed with design flexibility.
Called CYP (computerized yarn placement), Tapistron's machine produces highly versatile patterned carpets for residential and commercial uses much faster and at less cost than conventional machines, says analyst Martin Magida of Josephthal, Lyon & Ross. In addition to making carpets in almost any design, color, pile, or texture--a flexibility not available in other tufting machines--the CYP loom "can change production configurations in minutes, compared with days for its competitors, and at significant cost advantage," explains Magida. He estimates that one CYP loom can save about $2.8 million annually compared with $800,000 for most machines.
Tapistron shipped four machines, ranging in price from $850,000 to $1.1 million, in 1992. It recently received an order for two from Habitat Industries, a major carpetmaker in Thailand.
The analyst sees the company posting a profit this year of 39 a share on sales of $16 million and earnings of 85 next year on sales of $28 million.
Tapistron's stock has flown from 3 1/4 a share in October to 6 1/4. He expects the stock to rise to 12 this year. GENE G. MARCIAL