In this episode, we’re focusing on two stocks that are poised to benefit from significant rebuilding work that will be required in the aftermath of Hurricanes Harvey and Irma. These are among the most powerful storms recorded in recent history and damages from these two storms could be in hundreds of billions of dollars. Our thoughts and prayers are with those affected by these storms.
Home Depot ( HD - Free Report)
Home improvement retailers are expected to see a boost in sales over the next several quarters, as they did after Superstorm Sandy.
Home Depot reported excellent results, exceeding our estimates for revenues as well as earnings. They also raised their guidance for the year. In fact, they have been beating consistently; not a single miss in the last five years as we can see from the beautiful “Price, Consensus and EPS Surprise” chart.
Home Depot’s business is somewhat immune from the Amazon effect since when shopping for big ticket items and DIY projects, consumers like to visit a store and talk to associates there. The stock had taken a hit when Sears announced a deal to sell its Kenmore brand products through Amazon but recovered quickly in the next few days.
It’s a Zacks Rank #2 (Buy) stock, with a Growth Score of “A” and a dividend yield of 2.3%.
Potlatch ( PCH - Free Report)
Potlatch is a timber REIT. They own approximately 1.6 million acres of forestland and are among the top lumber manufacturers in the US.
Lumber prices have been rising this year, thanks mainly to the ongoing trade dispute between the US and Canada. These are expected to rise further as a lot of lumber will be required in reconstruction. Of all timber REITs, Potlatch has highest leverage to lumber prices.
The timber REIT reported adjusted earnings of $0.54 per share, substantially ahead of the Zacks Consensus Estimate of $0.30 as they benefitted from rising lumber prices.
The company has been returning a lot of cash to shareholders via dividends and buybacks. The dividend yield is 3.1% as of now.
It’s a Zacks Rank #1 (Strong Buy) stock, with a Growth Score of “B” and industry rank in top 20%.
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