What happened
Shares of Mayville Engineering (MEC +0.21%) climbed 20% higher on Monday morning after the small manufacturing company got a positive write-up in Barron's over the weekend. Mayville isn't on a lot of radar screens right now, but that could soon change as companies rethink their supply chains.
So what
Mayville is a somewhat sleepy Wisconsin-based maker of a range of prototyping and tooling components, but at least one financial publication thinks that the company could see more business in the years to come.
Image source: Getty Images.
Nicholas Jasinski of Barron's wrote that as U.S. manufacturers incorporate the lessons they learned from the pandemic, they'll find the ability to source components reliably is just as important as cost, if not more so. That should give Mayville a leg up against foreign competitors. If nothing else, companies appear to be prioritizing having multiple suppliers.
That would be a nice reversal for Mayville, which has been caught up in the U.S.-China trade war. Even with Monday's gains, the stock is still trailing the S&P 500 by nearly 50 percentage points over the past five years.
Now what
Investors monitoring the company's second-quarter earnings report last month heard a similar optimistic outlook directly from Mayville, but there was reason for caution as well. CEO Bob Kamphuis said he sees "strong demand trends across almost all of the end markets we focus on," but warned that "finding quality employees, inflationary pressures, and supply chain constraint factors continue to be challenges in 2021."
Things seem to be going Mayville's way, but investors should be cautious about jumping into this rally. These so-called Barron's bumps tend to be short-lived, and it is unlikely Mayville will be able to go straight up from here.
This is a good company with some positive tailwinds, but investors should be in no rush to jump in on a day when the stock is up big.
