3 Stocks to Invest in a Housing Boom
With the U.S seemingly shrugging off the "anything but housing" mindset that inevitably kicked in after the great financial crisis over a decade ago and housing starts now back in growth mode, it's time to look at some companies that can benefit from a housing boom. I think plumbing and architectural products company Masco (NYSE: MAS), DIY toolmaker Stanley Black & Decker (NYSE: SWK), and windows and door manufacturer JELD-WEN (NYSE: JELD) fit the bill. Here's why.
Masco generates 81% of its sales in North America, so it's safe to say it's a play on the U.S. housing market. Masco operates out of two business segments, with plumbing products generating 67% of sales from North America and decorative architectural products only selling to North America. Both segments are heavily exposed to the repair and remodel market (83% of sales for the plumbing products segment and 96% for decorative architectural products).
That said, the reality is that a booming housing market is synonymous with rising house prices and good housing sales. These metrics are key drivers of the repair and remodel market. Consumers feel the wealth effect from rising house prices, and homes get remodeled in anticipation of a sale or after a purchase. On the latest earnings call, CEO Keith Allman said: "Home price appreciation was up nearly 30% in December and existing home sales were up over 22% compared to the prior year. Each of these metrics has a strong correlation with our sales on a lag basis."
Source Fool.com
