Mueller Industries: Hidden Value in Industrial Goods

Mueller Industries (MLI) is a leading manufacturer of copper, aluminum, and plastic parts for the plumbing, refrigeration, and air conditioning industries.

Buckingham is the only Wall Street firm covering the company, which makes it the type of hidden value play that often goes unnoticed by investors, and there has not been any Analyst activity in over three years.

Shares are near a major technical breakout at $24.70 that would target a move to $33, a 33% move higher in shares.

Shares of the industrial goods company trade just 0.4X sales, 2.88X cash, and 4.15X free cash flow, and has a debt to equity ratio of just 0.25. At an EV/Revenue of 0.34 and EV/EBITDA of 5.18 shares of Mueller are extremely undervalued.

Shares fell out of favor with Wall Street, possibly due to mis-management, as shares rose 15% last October when the CEO died of lung cancer, an unusual news reaction.

There is not a lot of flashiness with this company, but the value is there and it could eventually become a solid acquisition target. A housing recovery will also benefit the demand for the company’s products, and could spur earnings growth.

Mueller will be one to watch on a technical breakout, and as a cash rich company it is one to own while the market figures out its next move.

Disclosure: No Holdings, Will be Buyer Above $24.70

Comments

[djo:]

If you like MLI, look at MWA.
If government ever does anything about our rotting infrastructure
(besides lying and stealing money) and our economy ever recovers, both MLI and MWA will be beneficiaries.
MWA "takeover" values is currently $8-16.
Yes, I own shares.

Jun 17 09:08 AM