2024-02-19 09:52:27 ET
Summary
- Encore Wire's stock has seen a significant increase in price, leading to a re-evaluation as a value investor.
- WIRE has seen declining earnings due to a cycle of contracting margins.
- Encore Wire is a good business with long-term potential, but at current share prices value investors should sell and seek better opportunities.
When I first wrote about Encore Wire ( WIRE ), it was trading at $177 a share, with a price-to-earnings ratio of 5.77. Since, it's run as high as $250 and is currently sitting at $227 a share, trading at a price-to-earnings ratio of 10.6. That kind of run-up in a relatively short period of time warrants some re-evaluation as a value investor.
My core principle in investing is to buy at a good price, and I put more focus on that than on a specific exit strategy. Generally, I'm open to holding long-term if value remains, or exiting when I think a particular stock is overpriced relative to its valuation or alternative options....
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Encore Wire: Good Business, But No Longer A Value Play (Rating Downgrade)