Home improvement stocks performed strongly over the past year thanks to the pandemic that spurred home buying and home improvement activities. In mid-2021, home improvement players are still seeing increasing demand. Despite the easing of pandemic restrictions and increased outdoor exercise, Americans continue to be leaning toward home renovation and maintenance projects. Staying indoors for longer last year made people aware of the importance of the home. Industry experts believe that consumer discretionary spending on homes is likely to continue as interest in home maintenance persists even after a pandemic.
Home improvement retailers are capitalizing on consumer investments to make the home a pleasant and comfortable place to be. A major trend is interior remodeling to facilitate continuous home work and distance learning. Do-it-yourself (DIY) projects for remodeling, decorating and maintaining furniture and furnishings are enjoying increasing popularity. Home improvement companies are seeing increased demand for garden tools and products related to indoor hobbies such as tool kits and paints.
Favorable framework conditions on the housing market, characterized by high level of home buying activity, benefit the home improvement needs. Low mortgage rates and high demand for residential property are driving the housing market. The rapid urbanization trends remain an advantage for those involved in this area. The development of real estate projects and the expansion of cities and towns have kept the demand for home accessories as well as tools and equipment low.
Home improvement retailers are also seeing an increase in online business transactions thanks to increased digital dependency. This helps companies to fall back on robust demand conditions in the market. Industry participants are investing in improving omni-channel functions, including online ordering and delivery services.
Given the positive developments in the home improvement industry, investors may consider investing in stocks in this area. We highlighted four such companies that benefit from their business expansion efforts and favorable market trends.
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4 prominent tips
First on our list is the leading home improvement retailer – The Home Depot, Inc. HD. The company benefits from increased renovation and construction projects. It builds product ranges and delivery systems to effectively meet market needs. Home Depot follows a flexible networked infrastructure that helps it adapt to changing customer preferences. This No. 2 (Buy) Zacks company benefits from broad-based strength in stores and regions, as well as a growing presence in the digital space. The company is working to strengthen omni-channel features such as roadside collection and online in-store collection with convenient collection lockers. The stock is up about 29% in one year. Zacks’ consensus estimate for fiscal 2021 revenue has increased 0.7% over the past 30 days. You can see the full list of current Zacks # 1 Rank (Strong Buy) stocks here.
Beacon Roofing Supply, Inc. BECN, with a Zacks rank of # 2, is another potential choice. This roofing distributor is benefiting from the improved demand for residential products. In addition, the investments in improving the technology infrastructure support the growth of the e-commerce platform. The new On-Time and Complete (OTC) delivery network and redesigned website bring customers in-store and online with improved product availability, delivery tracking and notifications. The company is also involved in cost management. Beacon Roofing Supply’s shares are up 118.4% in one year. The Zacks consensus estimate for FY2021 earnings has remained stable for the past 30 days.
Annual price development
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Builders FirstSource, Inc. BLDR is a Dallas, TX based supplier and manufacturer of building materials. The company is benefiting from increased demand for its integrated services, supported by an improved housing market and relocation to the suburbs. This Zacks Rank # 2 company has been on the acquisition front, which is helping sales. It also focuses on expense management practices. The Zacks Consensus Estimate for 2021 has remained stable for the past 30 days. What’s impressive is that the stock is up 126.2% over the past year.
Investors can also invest in Fastenal company FAST. This Winona, MN-based industrial and construction products wholesaler benefits from installing vending machines. In addition, this Zacks company in second place is striving to strengthen the portfolio of local locations. The company has also taken prudent cost control measures to contain pressure from rising operating costs. Fastenal is also working on expanding its e-commerce presence. What’s noteworthy is that the stock is up 24.5% in one year. The Zacks Consensus Estimate for 2021 has remained stable for the past 30 days.
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Fastenal Company (FAST): Free Stock Research Report
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