We’re well into the summer with nearly a third of September behind us. In a normal year, this would be when we’d be talking about the new school season.
But everything is kind of different this year. So instead, we are talking about vaccines and when it might be okay for us to let down our guard and do the kind of things we’ve been itching to do. After we’ve figured out how to deal with the new normal that is.
But adjusting to the new normal is easier said than done. Where a work from home operation was easily achievable, people started doing it immediately. But more and more employers are opening up to the idea, not only because it’s safer but also because of the cost savings involved.
This appears to be developing into a more permanent trend. So many people who are renting homes in areas where they can’t afford to buy will think about moving to areas where they can afford to buy, especially if this ties in with their other goals, such as raising a family.
Since mortgage rates have never been as conducive as they’ve been of late, this may just be the time when they take the plunge.
Also, home buyers typically start shopping sometime in March or April. But everything was pretty much shut down then. Even when things opened up, sellers were at first reluctant to invite strangers in, so they took their inventory off the market. This pushed up home prices, which remain elevated today. But buoyant prices brought more sellers back on the market. So today, prices are a deterrent in only the major metropolitan areas like San Francisco, San Jose, LA, San Diego, etc. There are many other regions where affordability wouldn’t be a consideration in home buying.
All these factors are contributing to the unseasonal strength that we’re seeing in home sales. Driven by the number of people looking to start families, the number of people looking to work from home and the number of people that could potentially move from rented accommodation to take advantage of the low mortgage rates, housing demand is strong and deep.
I therefore like companies with exposure to the segment, some of which are listed below-
In the Zacks-classified Building Products - Home Builders industry, which is in the top 2% of Zacks-classified industries, there’s D.R. Horton.
D.R. Horton, Inc. (DHI - Free Report) : Zacks Rank #1 (Strong Buy), VGM Score B, 2020 EPS growth expected to be 37.5% on revenue that’s expected to grow 12.9%.
In the Zacks-classified Building Products – Wood industry, which is in the top 3% of Zacks-classified industries, there’s JELD-WEN, BlueLinx, LouisianaPacific and Masonite International.
JELD-WEN Holding, Inc. (JELD - Free Report) : Zacks Rank #1, VGM Score A, 2020 EPS growth expected to be 11.7% on revenue that’s expected to decline 4.3%. 2021 earnings will grow 24.5% on revenue that will grow 4.5%.
BlueLinx Holdings Inc. (BXC - Free Report) : Zacks Rank #1, VGM Score A, 2020 EPS growth expected to be 156.0% on revenue that’s expected to grow 1.5%.
LouisianaPacific Corp. (LPX - Free Report) : Zacks Rank #1, VGM Score A, 2020 EPS growth expected to be 156.0% on revenue that’s expected to grow 1.5%.
Masonite International Corp. (DOOR - Free Report) : Zacks Rank #1, VGM Score B, 2020 EPS growth expected to be 42.1% on revenue that’s expected to grow -0.48%. 2021 earnings will grow 21.3% on revenue that will grow 5.6%.
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