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Home Improvement Products Demand Improves: 3 Stocks to Watch
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Life for most individuals during the coronavirus pandemic is defined by how time is spent indoors. Increased home stay and corresponding work-from-home scenarios have led individuals to focus on renovation and maintenance activities. This is certainly an upside for players in the Zacks Building Products – Retail industry which largely cater to home improvement and construction needs.
To top this, favorable trends in the housing market have prompted increased home buying and selling activities, which in turn is proving to be favorable for retailers engaged in home improvement works. Moreover, few players are gaining from consumers’ shift to online purchasing and are investing toward enhancing their omni-channel capabilities.
Digging Deeper
The Retail Building Products industry is expected to gain from the housing market rebound. Low mortgage rates (currently 3%) and high buyers demand have been aiding to keep the US housing market strong. Housing prices have been surging in the face of high demand and shortage of inventory. Nevertheless, low mortgage rates are helping consumers offset surge in home prices. Well, these favorable trends are likely to lead to a modest spike in demand for home improvements and building products in the near term.
With stay-at-home practice being widely adopted amid the pandemic, people are focusing on making homes an enjoyable and comfortable space. Do-it-yourself (DIY) projects for home remodeling, decorating and maintenance of furniture are being undertaken. Companies are gaining from rising sales of products ranging from outdoor and indoor fixtures and appliances.
Home improvement products retailers are witnessing higher demand for gardening and other stay-at-home activities related products like paint and tool kits. In fact, outdoor projects, especially those related to pools, spas, decks and patio have become quite popular. Speaking of indoor projects, kitchen and bath remodeling activities are common. Players in the industry are ramping up production to meet rising demand trends for products that help fulfill such home improvement works. This should continue aiding the top line of the industry players in the forthcoming periods.
We note that the Building Products – Retail industry is housed within the broader Zacks Retail-Wholesale sector. It currently carries a Zacks Industry Rank #29, which places it in the top 12% of more than 250 Zacks industries. The industry has gained 35.1% in the past year compared with the S&P 500’s rise of 9.1%. Meanwhile, the broader sector has moved up 40.3% in the said time frame.
One-Year Price Performance
3 Stocks in Focus
With the near-term scenario looking bright for the home improvements industry, investors may consider keeping an eye on stocks from this space. We have highlighted three such companies, who are gaining from the favorable trends in the market and adopting well-chalked practices to stay afloat.
First on our list is Lowe’s Companies Inc. (LOW - Free Report) . This Mooresville, NC-based home improvement retailer is gaining from its sturdy U.S. home-improvement business. In fact, comparable sales (comps) for the company’s U.S. home-improvement business increased 35.1% in the second quarter. Solid demand across DIY and pro customers across channels, product categories and geographies is boosting the top line. Lowe's is also ramping up efforts to expand digital offerings. In this context, the migration of Lowes.com to the cloud as well as the roll out of curbside pickup helped the company sustain online growth. Markedly, sales at Lowes.com increased 135% in second-quarter fiscal 2020. With rising demand for contactless services, Lowe’s latest investment in self-service lockers is another feather in its cap.
Shares of this Zacks Rank #2 (Buy) company have surged 54.6% in the past year. The company has seen upward revisions for its Zacks Consensus Estimate for fiscal 2020 earnings in the past 60 days by 15.8%. Moreover, the company has a trailing four-quarter earnings surprise of 17.2%, on average.
The Home Depot, Inc. (HD - Free Report) is another potential pick. This Atlanta, GA-based home improvement retailer follows a flexible interconnected infrastructure, which has helped it quickly adapt to changing customer preferences. This Zacks Rank #3 (Hold) company is gaining from broad-based strength across stores and geographies as well as growing presence in the digital arena. The company is working toward boosting omni-channel functions such as curbside pickup and buy online pickup in store services with convenient pickup lockers. The company has seen 6% upward revision in fiscal 2020 earnings estimates in the past 60 days. It has a trailing four-quarter earnings surprise of 1.3%, on average. Impressively, the stock has rallied about 21.7% in the past year.
The Home Depot, Inc. Price, Consensus and EPS Surprise
Lumber Liquidators Holdings, Inc. (LL - Free Report) is a leading specialty retailer of hard-surface flooring materials and accessories. The company, which currently carries a Zacks Rank #3, is gaining from its transformational plans to boost financial flexibility. Its investments in omni-channel platform are reaping benefits. In this respect, strategic investments made in digital capabilities such as Floor Finder and Picture It! Tools are helping customers to browse through products in LLFlooring.com, which is boosting web traffic. Apart from this, the company is striving to expand flooring products and designs. It is also expanding the availability of samples online. Markedly, the company has seen 11% upward revision in 2020 earnings estimates in the past 60 days. The stock has more than doubled in the past year.
Lumber Liquidators Holdings, Inc Price, Consensus and EPS Surprise
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Home Improvement Products Demand Improves: 3 Stocks to Watch
Life for most individuals during the coronavirus pandemic is defined by how time is spent indoors. Increased home stay and corresponding work-from-home scenarios have led individuals to focus on renovation and maintenance activities. This is certainly an upside for players in the Zacks Building Products – Retail industry which largely cater to home improvement and construction needs.
To top this, favorable trends in the housing market have prompted increased home buying and selling activities, which in turn is proving to be favorable for retailers engaged in home improvement works. Moreover, few players are gaining from consumers’ shift to online purchasing and are investing toward enhancing their omni-channel capabilities.
Digging Deeper
The Retail Building Products industry is expected to gain from the housing market rebound. Low mortgage rates (currently 3%) and high buyers demand have been aiding to keep the US housing market strong. Housing prices have been surging in the face of high demand and shortage of inventory. Nevertheless, low mortgage rates are helping consumers offset surge in home prices. Well, these favorable trends are likely to lead to a modest spike in demand for home improvements and building products in the near term.
With stay-at-home practice being widely adopted amid the pandemic, people are focusing on making homes an enjoyable and comfortable space. Do-it-yourself (DIY) projects for home remodeling, decorating and maintenance of furniture are being undertaken. Companies are gaining from rising sales of products ranging from outdoor and indoor fixtures and appliances.
Home improvement products retailers are witnessing higher demand for gardening and other stay-at-home activities related products like paint and tool kits. In fact, outdoor projects, especially those related to pools, spas, decks and patio have become quite popular. Speaking of indoor projects, kitchen and bath remodeling activities are common. Players in the industry are ramping up production to meet rising demand trends for products that help fulfill such home improvement works. This should continue aiding the top line of the industry players in the forthcoming periods.
We note that the Building Products – Retail industry is housed within the broader Zacks Retail-Wholesale sector. It currently carries a Zacks Industry Rank #29, which places it in the top 12% of more than 250 Zacks industries. The industry has gained 35.1% in the past year compared with the S&P 500’s rise of 9.1%. Meanwhile, the broader sector has moved up 40.3% in the said time frame.
One-Year Price Performance
3 Stocks in Focus
With the near-term scenario looking bright for the home improvements industry, investors may consider keeping an eye on stocks from this space. We have highlighted three such companies, who are gaining from the favorable trends in the market and adopting well-chalked practices to stay afloat.
First on our list is Lowe’s Companies Inc. (LOW - Free Report) . This Mooresville, NC-based home improvement retailer is gaining from its sturdy U.S. home-improvement business. In fact, comparable sales (comps) for the company’s U.S. home-improvement business increased 35.1% in the second quarter. Solid demand across DIY and pro customers across channels, product categories and geographies is boosting the top line. Lowe's is also ramping up efforts to expand digital offerings. In this context, the migration of Lowes.com to the cloud as well as the roll out of curbside pickup helped the company sustain online growth. Markedly, sales at Lowes.com increased 135% in second-quarter fiscal 2020. With rising demand for contactless services, Lowe’s latest investment in self-service lockers is another feather in its cap.
Shares of this Zacks Rank #2 (Buy) company have surged 54.6% in the past year. The company has seen upward revisions for its Zacks Consensus Estimate for fiscal 2020 earnings in the past 60 days by 15.8%. Moreover, the company has a trailing four-quarter earnings surprise of 17.2%, on average.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lowes Companies, Inc. Price, Consensus and EPS Surprise
Lowes Companies, Inc. price-consensus-eps-surprise-chart | Lowes Companies, Inc. Quote
The Home Depot, Inc. (HD - Free Report) is another potential pick. This Atlanta, GA-based home improvement retailer follows a flexible interconnected infrastructure, which has helped it quickly adapt to changing customer preferences. This Zacks Rank #3 (Hold) company is gaining from broad-based strength across stores and geographies as well as growing presence in the digital arena. The company is working toward boosting omni-channel functions such as curbside pickup and buy online pickup in store services with convenient pickup lockers. The company has seen 6% upward revision in fiscal 2020 earnings estimates in the past 60 days. It has a trailing four-quarter earnings surprise of 1.3%, on average. Impressively, the stock has rallied about 21.7% in the past year.
The Home Depot, Inc. Price, Consensus and EPS Surprise
The Home Depot, Inc. price-consensus-eps-surprise-chart | The Home Depot, Inc. Quote
Lumber Liquidators Holdings, Inc. (LL - Free Report) is a leading specialty retailer of hard-surface flooring materials and accessories. The company, which currently carries a Zacks Rank #3, is gaining from its transformational plans to boost financial flexibility. Its investments in omni-channel platform are reaping benefits. In this respect, strategic investments made in digital capabilities such as Floor Finder and Picture It! Tools are helping customers to browse through products in LLFlooring.com, which is boosting web traffic. Apart from this, the company is striving to expand flooring products and designs. It is also expanding the availability of samples online. Markedly, the company has seen 11% upward revision in 2020 earnings estimates in the past 60 days. The stock has more than doubled in the past year.
Lumber Liquidators Holdings, Inc Price, Consensus and EPS Surprise
Lumber Liquidators Holdings, Inc price-consensus-eps-surprise-chart | Lumber Liquidators Holdings, Inc Quote
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>