Down 70%, This Stock Could Get Cut in Half Again
One of the surprising outcomes of the pandemic was a booming housing market. The combination of low interest rates, stimulus payments, and a suspension of some student loan repayments sent housing prices through the roof. From May 2020 through the summer of 2022, the median sales price of both new and existing homes in the U.S. rose about 50%. That's compared to the roughly 3% average annual increase in the previous 30 years.
Among the companies that benefited from the rapid climb, Trex (NYSE: TREX) has been one of the worst-performing stocks. It's down 9% since the end of 2019 and has fallen a whopping 70% from its peak about this time last year. It might even fall further.
Housing is cyclical, and since Trex makes composite decking and railing, its sales and profitability are cyclical, too. If homeowners have money to spend and feel confident that the value of their homes are rising, they're more likely to renovate. And outdoor living space is one of Americans' favorite ways to spruce up their homes.
Source Fool.com
