Mueller Industries (MLI) may be a case-in-point as to how difficult it can be for investors to make money from long-term investments in commodity or commodity-like businesses. Management here has done a lot of good things, including a relentless drive to lower production costs, and that has led to better margins and pretty attractive returns on assets and invested capital… and yet, the long-term annualized return from the shares is around 7% to 8%, well below that of the S&P 500.
There are a lot of things that make Mueller a difficult call today. I think the U.S. housing market can stay fairly strong for a while, but I’m not so sure about copper prices, and this is historically a stock where you want to buy after a 25%-plus sell-off, not as the shares reach new all-time highs. I can argue for upside toward $50 and investors with more bullish outlooks on copper prices may want to consider the name, but for GARP or value investors, this is a name to consider at the next multiyear low.
Read the full article here:
Mueller Industries Riding High On Hot Housing And Copper Prices
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