Long
Is this beat up flooring company done getting beat up?
Armstrong Flooring (ticker - AFI) in my opinion is setting itself up for another new high in the future. First I'll list a few technical indicators that are making me think we are close to a bottom. The stock is actually up for the year. Seems like after these recent sell offs allot of stocks especially the bigger names are negative for the year and continue to trend down. AFI is still trending up, as far as I can see I don't see anything saying that it's up trend is over. After its recent run up and sell off we did see it hold at the 50ma which I consider a positive sign. Its also on a sequential red 9 with the 9 candle being green as of the time I'm typing this. Allot of times this can be the signal as a reversal. It also appears to have a strong support base around $4.25 area which it is not that far away from which also for me reduces the risk. I don't want to buy something I think can have the possible potential drop of a 50% or so. Its also a low volume stock, most days volume is between 100-150k. On its drop yesterday volume was over 700k, allot of buying stepping up to the table which was another signal to me that a bottom is in or could be near.
Now for other reasons why you should be bullish this company. Out of the flooring stocks on the market, it is the smallest not only by market cap and volume but also available shares. One of the Bitcoin arguments is rarity only 21 million coins. Well Afi in that sense is the Bitcoin of flooring stocks with a public float of 20.68 million shares.
What makes Armstrong a better choice compared to other manufacturers ? The products they produce and much less exposure to supply chain risks we have been seeing with things like lumber. So when Armstrong split from AWI it was a bleeding company. One of the things they did was sell their Wood flooring Division. The price of lumber is sky high. That means the price of wood floors are sky high. That means less consumers will be buying wood floors which is going to equal less sales for companies manufacturing wood flooring. Instead consumers will be going for the cheaper alternative like a laminate or vinyl flooring product that a manufacturer like Armstrong makes. So the lumber shortage and sky high prices can potentially bring in allot of demand for wood looking flooring products. They also do not have any exposure to carpeting or carpet tiles which is good post pandemic. Carpet can never fully be cleaned. That means it is much much more disease prone. At least in a commercial setting you should see allot of business's that have carpet installed switch to something much more sanitary, they always try to reduce risk especially for insurance purposes. So having 0 exposure to carpet means when carpet sales drop like a fly your earnings wont hurt. If anything you will benefit from it. So now lets talk about Armstrong's supply chain. Majority of there products are made in America. They recently consolidated plants and sold off there one in CA, that was the cause of the recent rally. That sale was for more money than AFI's marketcap at the time. You can argue since that sale the company is still undervalued, this sale should be posted in the next earnings causing it to blast through expectations. Anyways with majority of the products made in America that means stuff like like rising shipping costs or tariffs on imports don't hurt them like some of there competitors who make everything over seas. One of the biggest issues in the flooring industry is the supply chain. Especially in products like sheet vinyl that is used in medical situations like operating rooms say you get a call for a repair, it can take 30-90 days to get the material because it gets made over seas then has to be shipped by container. During Armstrong's last earning call they stated they will start producing sheet vinyl in America, for the flooring industry this is huge because if you go with Armstrong you'll be able to remove or reduce allot of the lead times.
Biden did his press conference yesterday. The one thing he talked about that would greatly help this stock is removing all of the old asbestos tiles out of schools. Any school built pre 1982 that hasn't seen a flooring remodel has asbestos flooring. That's probably 75% or so of schools in America . It's not harmful as long as its encapsulated which it is 99% of the times (your glue has asbestos its covered by the tile, your old vct has asbestos in it but its covered by layers of wax) its when its airborne it becomes a issue. Anyways Armstrong is one of the few producers of vct flooring. Its the cheapest most cost effective floor you can put in, it lasts a long time too, hence why all these old school still have the asbestos vct flooring installed. Out of the few manufacturers that make vct Armstrong is actually the cheapest and buy allot. Mannington and Tarkett/Azrock are pretty expensive. Its also the best overall product out of them all. Over the last I don't know 30-40 plus years majority of the flooring put in schools, government housing and so forth has been Armstrong vct. As far as government funded or public buildings go it is everywhere. So if Biden does come through with this Armstrong will greatly profit the next few years. I wouldn't be shocked to see this company 5-6x in marketcap a couple years from now.
You've probably come to the conclusion that I work in the flooring industry. I do. Was a union flooring installer for almost 20 years before doing my own thing. So I know the commercial flooring business inside and out. I can write a entire novel on why you should be long this stock.
Best of luck on your trades!
edit-just fixing some typo's I found
Now for other reasons why you should be bullish this company. Out of the flooring stocks on the market, it is the smallest not only by market cap and volume but also available shares. One of the Bitcoin arguments is rarity only 21 million coins. Well Afi in that sense is the Bitcoin of flooring stocks with a public float of 20.68 million shares.
What makes Armstrong a better choice compared to other manufacturers ? The products they produce and much less exposure to supply chain risks we have been seeing with things like lumber. So when Armstrong split from AWI it was a bleeding company. One of the things they did was sell their Wood flooring Division. The price of lumber is sky high. That means the price of wood floors are sky high. That means less consumers will be buying wood floors which is going to equal less sales for companies manufacturing wood flooring. Instead consumers will be going for the cheaper alternative like a laminate or vinyl flooring product that a manufacturer like Armstrong makes. So the lumber shortage and sky high prices can potentially bring in allot of demand for wood looking flooring products. They also do not have any exposure to carpeting or carpet tiles which is good post pandemic. Carpet can never fully be cleaned. That means it is much much more disease prone. At least in a commercial setting you should see allot of business's that have carpet installed switch to something much more sanitary, they always try to reduce risk especially for insurance purposes. So having 0 exposure to carpet means when carpet sales drop like a fly your earnings wont hurt. If anything you will benefit from it. So now lets talk about Armstrong's supply chain. Majority of there products are made in America. They recently consolidated plants and sold off there one in CA, that was the cause of the recent rally. That sale was for more money than AFI's marketcap at the time. You can argue since that sale the company is still undervalued, this sale should be posted in the next earnings causing it to blast through expectations. Anyways with majority of the products made in America that means stuff like like rising shipping costs or tariffs on imports don't hurt them like some of there competitors who make everything over seas. One of the biggest issues in the flooring industry is the supply chain. Especially in products like sheet vinyl that is used in medical situations like operating rooms say you get a call for a repair, it can take 30-90 days to get the material because it gets made over seas then has to be shipped by container. During Armstrong's last earning call they stated they will start producing sheet vinyl in America, for the flooring industry this is huge because if you go with Armstrong you'll be able to remove or reduce allot of the lead times.
Biden did his press conference yesterday. The one thing he talked about that would greatly help this stock is removing all of the old asbestos tiles out of schools. Any school built pre 1982 that hasn't seen a flooring remodel has asbestos flooring. That's probably 75% or so of schools in America . It's not harmful as long as its encapsulated which it is 99% of the times (your glue has asbestos its covered by the tile, your old vct has asbestos in it but its covered by layers of wax) its when its airborne it becomes a issue. Anyways Armstrong is one of the few producers of vct flooring. Its the cheapest most cost effective floor you can put in, it lasts a long time too, hence why all these old school still have the asbestos vct flooring installed. Out of the few manufacturers that make vct Armstrong is actually the cheapest and buy allot. Mannington and Tarkett/Azrock are pretty expensive. Its also the best overall product out of them all. Over the last I don't know 30-40 plus years majority of the flooring put in schools, government housing and so forth has been Armstrong vct. As far as government funded or public buildings go it is everywhere. So if Biden does come through with this Armstrong will greatly profit the next few years. I wouldn't be shocked to see this company 5-6x in marketcap a couple years from now.
You've probably come to the conclusion that I work in the flooring industry. I do. Was a union flooring installer for almost 20 years before doing my own thing. So I know the commercial flooring business inside and out. I can write a entire novel on why you should be long this stock.
Best of luck on your trades!
edit-just fixing some typo's I found
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