) doesn't make magic carpets, but the No. 1 publicly traded floor-covering producer is flying high. Now at 80.75 -- up from 65 in August -- its shares are bound to go higher, says Ed Walczak of Vontobel Asset Management, which owns stock. He sees it reaching 100 in a year, thanks to the wide swaths it holds in the carpet and tile markets.
Its 2001 buyout of Dal-Tile International made Mohawk the largest supplier of ceramic tile, the fastest-growing and most lucrative thing on the floor. The business is so enticing that Warren Buffett's Berkshire Hathaway bought the other biggie, Shaw Industries, in 2001. Even if the demand from new homes tapered off, the replacement business -- 65% of home carpet sales -- should offset the drop, says Walczak. And the commercial market also adds nicely to overall demand, he notes. Unlike many companies that moved production overseas, Mohawk stayed onshore and became a more efficient producer, he says. And instead of buying the nylon and propylene fiber it needs from DuPont (DD
), Mohawk built its own fiber plants. Analyst Greg Herr of Vontobel expects earnings of $4.98 in 2004 on sales of $5.2 billion and $5.40 in 2005 on $5.7 billion. Keith Hughes of SunTrust Robinson Humphrey is impressed by Mohawk's yearly growth of 16.9% in the past five years, and return on assets averaging 19.1%. He rates Mohawk a buy.Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. See Gene on Fridays at 1:20 p.m. EST on CNNfn's The Money Gang.