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Bull of the Day

Who's benefiting from the housing recovery and the increase in home remodeling? Fortune Brands Home & Security, Inc. (FBHS - Snapshot Report) is expected to see double digit earnings growth this year and in 2014 as consumers finally have started spending on their homes again. This Zacks #1 Rank (Strong Buy) raised full year guidance after a solid second quarter.

Fortune Brands Home & Security was created in Oct 2011 when it was spun off from Fortune Brands. You probably know some of its brands. It makes products such as MasterBrand cabinets, Moen faucets, Simonton windows and Therma-True door systems. In the security area, it also sells the Master Lock brand.

Sales Up 11% in Q2

On July 24, Fortune Brands Home & Security reported second quarter results and surprised on the Zacks Consensus for the fourth quarter in a row. The surprises are indicative of the turnaround in the housing market over that time.

Sales jumped 11% year over year to $1.04 billion with its home segments posting double digit sales growth. Kitchen & Bath Cabinetry sales rose 13% while Plumbing & Accessories grew 15%. It also saw some positive signs in its windows business.

Security & Storage sales were flat even as security sales rose 4%. It was offset by lower tool storage sales but it is repositioning that business.

Paid First Dividend and Bought WoodCrafters

On June 19, the company paid its first quarterly cash dividend since going public, of $0.10. This is a yield of 1%.

It also completed the acquisition of bathroom vanity maker WoodCrafters Home Products for $300 million. This company will be added to the Kitchen & Bath Cabinetry segment and will be accretive to the year.

Raised 2013 Guidance

Given the strong first half of the year and the addition of WoodCrafters, Fortune Brands Home & Security raised its full year earnings guidance to $1.35 - $1.43 from $1.23 - $1.33 with 4 cents the result of the WoodCrafters acquisition.

The analysts scrambled to raise estimates after the solid earnings report. 8 out of 8 estimates for 2013 moved higher since the report, pushing the Zacks Consensus Estimate up to the high end of the company's guidance range, to $1.42.

That would be earnings growth of 60% compared to 2012.

Analysts are equally as bullish about 2014 as earnings are forecast to jump another 31%.

Buy the Growth

Fortune Brands Home & Security is a play on the housing recovery. Most stocks in this space have soared over the last year and FBHS is no exception. Shares are trading near 2-year highs.

They're not cheap though. Fortune Brands Home & Security has a forward P/E of 29. But most investors are buying Fortune Brands Home & Security for the double digit growth.

The housing recovery, especially in new construction, has only just begun. Home starts aren't anywhere near "normal" levels which means business should grow for companies like Fortune Brands.

The consumers' obsession with housing and home remodeling, which was put on the back burner during the Great Recession, is also making a comeback.

This is the best of all world's for a home-focused company such as Fortune Brands.

For growth investors looking for a way to play the housing recovery, Fortune Brands Home & Security is one to keep on the short list.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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