Mohawk Industries (MHK) and Other Big Winners From July 2024
Volatility has increased in the markets, but the bullish bias remains intact—for now
- Volatility has increased in the financial markets, with the CBOE Volatility Index (VIX) recently climbing to a three-month high.
- Despite the increased volatility, however, Mohawk Industries has set a torrid pace, climbing more than 50% in just 30 days.
- The month of July has featured plenty of other winners, including 3M, DR Horton and Infosys.
The financial markets have been grappling with elevated volatility, but one stock has managed to rise above the turmoil: Mohawk Industries (MHK).
The company has soared to the top of the performance charts in the second half of 2024. Over the past 30 days, shares of Mohawk have surged by more than 50%.
Mohawk’s July 25 earnings report appears to have confirmed the bullish trend, providing fresh validation of the company’s recent turnaround efforts. This report highlighted significant improvements in operational efficiency, driven by the company’s aggressive restructuring plan.
The 2024 turnaround at Mohawk
Mohawk Industries, a key player in the consumer discretionary sector, focuses primarily on flooring. As one of the world’s largest flooring manufacturers, Mohawk’s extensive product line includes carpets, rugs, ceramic tiles, stones, laminates, wood and vinyl.
From 2021 to 2023, the company faced a challenging macroeconomic environment marked by record-high interest rates and persistent inflation, which together dampened consumer discretionary spending. Additionally, increased competition across most product categories forced Mohawk to invest heavily in new products and merchandising systems to maintain its market position, driving up operational costs.
These trends weighed heavily on shares of Mohawk. In May 2021, the company’s stock was trading at nearly $230 per share. But over the following 17 months, Mohawk’s stock plummeted to around $80 per share.
However, a turnaround began to take shape last autumn. In response to weakening demand and rising competition, Mohawk began a comprehensive restructuring aimed at becoming leaner and more efficient. It involved idling some manufacturing capacity, consolidating warehousing operations and streamlining product offerings.
These strategic moves have started to yield positive results, as evidenced by the company’s Q2 earnings report.
Encouraging Q2 earnings and forward guidance
After the restructuring, the company began showing steady signs of improvement. On July 25, Mohawk reported $157 million in net income, an increase of 55% from the same quarter a year ago. Earnings-per-share (EPS) soared to $2.46 , about 56% higher than the $1.58 per share reported in Q2 of the previous year.
The company’s forward guidance also looks even better. For Q3, Mohawk expects to book $2.80 to $2.90 per share, surpassing consensus expectations of $2.70 per share. The company also indicated the benefits from its restructuring would extend into next year, potentially saving an additional $100 million through 2025.
In fact, the company’s Q2 earnings report was so encouraging that analysts at Bank of America issued a rare “double upgrade” in the wake of the report. The bank previously rated the company’s shares “underperform,” but recently upgraded them to “buy.” A single upgrade would have taken Mohawk’s rating from “underperform” to “hold.”
Speaking to the positive effects of the ongoing restructuring, Bank of America analysts noted “an outlook for continued margin recovery, attractive valuation and improving capital allocation.” The bank assigned a target price of $177/share for Mohawk’s stock. Today, shares of Mohawk trade for about $160/share.
July’s other top performers
Looking beyond Mohawk Industries, some other top-performing stocks and cryptocurrencies from the month of July are highlighted below (market data as of July 29, 2024).
Top-Performing Single Stocks in July (market cap, $10 billion and above)
- Mohawk Industries (MHK) +54%
- DR Horton (DHI) +30%
- 3M (MMM) +25%
- First Citizens BancShares (FCNCA) +24%
- Sirius XM Holding (SIRI) +23%
- Legend Biotech (LEGN) +23%
- Infosys (INFY) +21%
- Citizens Financial (CFG) +20%
- Ubiquiti (UI) +20%
- Evercore (EVR) +16%
Top-Performing Single Stocks in July (market cap, between $2 million and $10 billion)
- Morphic Holding (MORF) +74%
- AST SpaceMobile (ASTS) +74%
- Viasat (VSAT) +55%
- Goosehead Insurance (GSHD) +60%
- Aurora Innovation (AUR) +50%
- Quantumscape (QS) +34%
- Bancorp (TBBK) +33%
- Columbia Banking System (COLB) +32%
- Customers Bancorp (CUBI) +32%
- Neumora Therapeutics (NMRA) +30%
- Provident Financial (PFS) +30%
Top-Performing Cryptocurrencies in July (market cap, $500 million and above)
- Cat in a Dogs World (MEW) +110%
- Mantra (OM) +63%
- LayerZero (ZRO) +57%
- Raydium (RAY) +57%
- SATS-Ordinals (SATS) +53%
- Helium (HNT) +51%
- Jupiter (JUP) +42%
- Popcat (POPCAT) +36%
- Lido Staked SOL (stSOL) +35%
- Solana (SOL) +31%
- Bittensor (TAO) +28%
- XRP (XRP) +27%
Andrew Prochnow has more than 15 years of experience trading the global financial markets, including 10 years as a professional options trader. Andrew is a frequent contributor of Luckbox Magazine.
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
