Unifi (NYSE:UFI) was already an interesting story on its own merits. This leading supplier of polyester and nylon yarns to the U.S. market has done a very good job over the last five years of using branded value-added products to lift margins and stand out from what is otherwise a challenging and highly competitive market. But with a new administration in Washington potentially bringing meaningful changes to U.S. trade policy, Unifi's status as a large domestic supplier to the apparel industry could get quite a bit more interesting.
I frankly have no idea what will actually happen with agreements like NAFTA and CAFTA, and that adds a potentially meaningful element of uncertainty to the model. That said, I believe Unifi will continue to find success in increasing its mix of value-added branded products, and I like the prospects for higher cash flow generation in the years to come. The shares have run about 20% since the election and are up about 50% from earlier lows, though, so it's harder to make a call that the shares are substantially undervalued today.
Trade Turbulence Adds A New Element To The Unifi Story