UBS’ Top Quant Stocks In AI, IT, Healthcare & Other Sectors: Top 33 Stocks In All Sectors

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

Number of Hedge Fund Investors In Q2 2024: 40

Sector: Consumer Discretionary

Mohawk Industries, Inc. (NYSE:MHK) is a building products company that sells flooring, tiles, roofing, and other associated products. As a result, the firm tends to thrive when interest rates are low and consumers and builders are able to buy its products for their projects. This has manifested in Mohawk Industries, Inc. (NYSE:MHK)’s share price as the stock is up 27.6% year to date. Part of the gains are attributable to tight management cost control, with the firm’s earnings per share growing by 9% during the second quarter and beating analyst estimates despite the fact that Mohawk Industries, Inc. (NYSE:MHK)’s revenue dropped by 5.1% annually to $2.8 billion. However, cost control can only take a real estate-exposed firm so far in today’s environment. This was clear after the firm’s Q3 results following which the stock lost 11.6%. During the quarter, Mohawk Industries, Inc. (NYSE:MHK)’s $2.7 billion revenue and $2.90 in EPS were in line with analyst estimates. Its midpoint $1.82 EPS guidance for Q4 missed analyst estimates of $2.24 by a wide margin, and consequently, investors priced out some of the growth from Mohawk Industries, Inc. (NYSE:MHK)’s shares.

Ariel Investments mentioned Mohawk Industries, Inc. (NYSE:MHK) in its Q3 2024 investor letter. Here is what the fund said:

“Several stocks in the portfolio had strong returns in the quarter. Manufacturer and distributor of floorcovering products, Mohawk Industries, Inc. (NYSE:MHK) advanced following solid earnings results and a subsequent increase in near-term guidance. Although sales volumes remain low and pricing headwinds continue, improved productivity and lower material costs drove margin expansion. Management also repurchased shares signaling increased confidence that the trough in earnings may be behind the company. 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.”