Jim Cramer’s Best Performers List: Top 10 Picks

7. Mohawk Industries, Inc. (NYSE:MHK)

Number of Hedge Fund Holders: 40

Mohawk Industries, Inc. (NYSE:MHK) is engaged in the design, manufacturing, sourcing, distribution, and marketing of flooring products targeted at both residential and commercial markets.

It offers a diverse range of products, including ceramic and porcelain tiles, natural stone materials, and quartz countertops. Its flooring portfolio features carpets, laminates, and luxury vinyl tiles, along with roofing panels and insulation boards. It markets its products under well-known brands like American Olean and Mohawk.

Part of Cramer’s SP 500’s 10 best performers in the third quarter, he talked about the company and said:

“When you think about what goes into construction, flooring is clearly a necessity and flooring is synonymous with a company called Mohawk Industries, the king of carpet, hardwood, and vinyl flooring, not to mention pretty much everything else you step on. Mohawk is a natural buy in a rate-cut cycle, which is why the stock jumped 41.5% last quarter. Again, this is well ahead of any turn in earnings.”

In response to current market conditions, Mohawk Industries (NYSE:MHK) is focusing on cost reduction and aligning its operations accordingly. To this end, it is implementing restructuring measures expected to generate annual savings of $100 million, with $20 to $25 million anticipated to be realized this year.

The upfront cash cost for these initiatives is projected at about $40 million, while the total cost may reach approximately $130 million. The timeline for executing these changes varies by project, with some extending into 2026.

Despite challenging market conditions globally, Mohawk Industries (NYSE:MHK) management reported that second-quarter results surpassed expectations. The commercial segment has continued to perform well, although some softness has been observed in the residential category. Management remains optimistic about long-term demand for the company’s products.

Ariel Investments stated the following regarding Mohawk Industries, Inc. (NYSE:MHK) in its Q2 2024 investor letter:

“In contrast, manufacturer and distributor of floorcovering products, Mohawk Industries, Inc. (NYSE:MHK) underperformed this quarter, as consumer demand and pricing remain under pressure due to secular headwinds in the housing market. In a difficult environment, management is successfully executing on cost savings and productivity initiatives, while also preparing the business for share gains as demand recovers. In our view, MHK’s healthy balance sheet and progress managing through economic cycles position the company to benefit from long-term growth in residential remodeling, new home construction and commercial projects.”