Jim Cramer’s Exclusive List: 10 Stocks You Should Keep an Eye On

7. The Timken Company (NYSE:TKR)

Number of Hedge Fund Investors: 31

Jim Cramer described The Timken Company (NYSE:TKR) as a classic example of a cyclical stock that performs well in a strong economy but faces challenges during economic downturns. He believes that The Timken Company (NYSE:TKR) is suited for the current economic climate, though he’s hesitant to say it’s the best choice right now.

“The Timken Company (NYSE:TKR) is a textbook smokestack stock, the kind of cyclical company that thrives in a strong economy but struggles during a downturn. I think The Timken Company (NYSE:TKR)’s right for this moment, but it might not be the most right. I can’t make that judgment until we learn more, which is why I’d love to have CEO Tarak Mehta on the show to dig deeper. “

The Timken Company (NYSE:TKR) is an attractive investment due to its stable financial performance, strategic growth efforts, and positive earnings outlook. In Q2 2024, The Timken Company (NYSE:TKR) reported $1.18 billion in sales and an adjusted EPS of $1.63, beating expectations despite a 7.1% drop in sales compared to the previous year, mainly due to lower demand in some markets. The Timken Company (NYSE:TKR)’s strong profitability is evident from its 19.5% adjusted EBITDA margin, showcasing its ability to remain resilient amid economic challenges.

The Timken Company (NYSE:TKR) is expanding its motion-control platform through strategic acquisitions, like CGI Inc., and investing in research and development to enhance its engineered bearings segment. Analysts expect EPS to rise to $1.91 by Q2 2025. Additionally, The Timken Company (NYSE:TKR) offers a stable dividend yield of 1.73% with a sustainable payout ratio of 25.9%, making it appealing to income-focused investors.