Barron's 2008 Roundtable member Eagle Capital Partners' Meryl Witmer bucks the trend by picking two housing-related stocks and a fashion retailer as high-octane stocks for the coming year.
- Mohawk Industries (NYSE:MHK) - together with Shaw (owned by Berkshire Hathaway (NYSE:BRK.A)) they rule 60% of the U.S. flooring market. Less than 18% of its sales are related to new-home construction, while about 80% of its revenue are on replacements - which have been stable. CEO Jeff Lorberbaum is smart and motivated; his family holds an 18% stake in the company. The company is a cash machine. Shares ($71) could hit $115 when investors turn rosier on housing.
- Whirlpool (NYSE:WHR) - the largest U.S. brand-name appliance maker, it's moving quickly into Europe, Asia and Latin America. Its 2006 acquisition of Maytag will start to play a role in the form of greater-than-expected cost savings and Maytag's underdeveloped product pipeline that Whirlpool is concentrating on.
- American Eagle Outfitters (NYSE:AEO) - best-of-breed teen mall retailer. CEO Jim O'Donnell (CEO of Gap (NYSE:GPS) in its best years) has rebuilt the brand by focusing on high-quality goods at reasonable prices. Investors are over-concerned with 2007's reduced earnings growth, which was a by-product of an unusually strong 2006.