Thanks to the coronavirus pandemic, 2020 was largely characterized by staying at home and social distancing. The increased indoor time caused many people to focus on making homes a comfortable and enjoyable space. Indeed, extensive interior redesigns have been made to adapt it to the needs of home and distance learning. The propensity for home renovation and maintenance projects has been beneficial for several home improvement companies. In addition, the real estate market saw higher home buying activity amid the pandemic. This also proved to be a benefit for companies that attend to home improvement needs.
But now that vaccinations are picking up pace, social distancing norms are expected to wear off at some point. This will likely result in more time being spent outdoors working, socializing, and entertaining. As a result, renovation projects are expected to move back from their current high levels. Still, industry experts believe that not all of the positive effects of a pandemic will wear off in 2021. They believe that working from home is likely to remain a standout feature in 2021. Many will likely continue to be interested in keeping their homes well maintained.
In addition, home improvement retailers are expected to continue to benefit from the rapid urbanization trends. Well, the continuous development of real estate projects and the expansion of cities have helped to keep the demand for home accessories, equipment and tools low. The demand for products for do-it-yourself projects is also likely to remain high. This includes products related to gardening and painting projects, as well as minor maintenance and repair work.
That being said, home improvement has benefited from the growing online business due to consumers’ propensity for digital transactions. As a result, home improvement players have invested in improving their omni-channel capabilities, including online ordering and delivery services. Such upward movements are likely to continue over the coming year and boost the performance of key industry players.
Since the scenario looks promising for the home improvement industry, investors may consider investing in stocks in this area. We highlighted three such companies that are benefiting from their strong expansion efforts and favorable market trends
The story goes on
Value for money
3 stocks in focus
First up is our list Builders FirstSource, Inc. BLDR. Based in Dallas, TX, the company supplies and manufactures a variety of building materials and components, as well as construction services. The company, which currently ranks # 1 in Zacks (Strong Buy), has a market capital of $ 4.76 billion. We find the company is benefiting from increased demand for integrated services, supported by favorable trends in the housing market and the shift to suburban living. Builders FirstSource is also active on the acquisition front supporting the top line. In August 2020, the company entered into a definitive merger agreement with BMC Stock Holdings, which will create the nation’s leading provider of building materials and services. In addition, the company engages in disciplined expense management practices. It is impressive that the share has risen by around 60.2% in the year to date. The Zacks consensus estimate for sales and earnings in 2021 shows an increase of 2% and 6.1% respectively compared to the same period of the previous year. You can see The full list of today’s Zacks # 1 Rank stocks can be found here.
Beacon Roofing Supply, Inc. BECN is another possible choice. This roofing materials retailer is currently ranked Zacks 1 and has a market capital of $ 2.81 billion. The company is benefiting from the improved demand for residential products. In addition, its investments in strengthening technology infrastructure support the growth of the e-commerce platform. The new On-Time and Complete (OTC) delivery network and redesigned website ensure that in-store and online customers receive improved product availability, delivery tracking and notifications. The company is also committed to cost management. The shares of Beacon Roofing Supply have gained 26.7% in the current year. The Zacks consensus estimate for sales and earnings for fiscal year 2021 shows an increase of 3.5% and 22.7%, respectively, compared to the same period of the previous year.
Well-known hardware stores, The Home Depot, Inc. HD is also benefiting from increased renovation and maintenance projects amid the pandemic. The company is expanding product ranges and delivery systems in order to effectively meet market requirements. In addition, the company follows a flexible, interconnected infrastructure that enables rapid adaptation to changing customer preferences. This Zacks Rank # 3 (Hold) company benefits from a broad base in stores and regions as well as from a growing presence in the digital space. The company is working to improve omni-channel features such as roadside collection and online in-store collection service with convenient collection lockers. It is impressive that the share has risen by around 24% in the year to date. The company has a market capital of $ 291.8 billion. The Zacks consensus estimate for sales and earnings for fiscal year 2021 shows an increase of 0.5% and 4.2%, respectively, compared to the same period of the previous year.
Zack’s top 10 stocks for 2021
In addition to the stocks discussed above, would you like to find out more about our top 10 tickers for the whole of 2021?
These 10 are carefully selected from over 4,000 companies that fall under the Zacks rank. They are our top buy and hold tips. Start your access to the new Zacks Top 10 stocks >>
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The Home Depot, Inc. (HD): Free Stock Analysis Report
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