2 Home Improvement Stocks to Buy This Month

The home improvement market has seen significant growth since the COVID-19 pandemic began as people were forced to spend more time at home, which has increased their interest in home improvement and maintenance. Additionally, homeowners’ shift in preference to modern and energy efficient solutions is motivating them to invest in sustainable restructuring and renovation work to limit their environmental impact. With that tailwind, the home improvement services market is projected to reach $ 585.30 billion by 2030. Registering a CAGR of 6.2% from 2021 to 2030.

However, affordable homes are lacking in developed regions while property prices are rising, encouraging homeowners to renovate their existing homes rather than moving to new homes. In addition, the conversion of newly purchased old buildings before they move in is another trend that is contributing to the growth of the industry.

With this in mind, we think established home improvement companies Lowe’s Companies, Inc. (LOW) and Mohawk Industries, Inc. (MIC) could be solid bets now.

Lowe’s Companies, Inc. (LOW)

LOW in Mooresville, NC, is a Home improvement retailer in the US and internationally. The company offers construction, maintenance, repair, remodeling and decoration products.

On November 17th, LOW announced a multi-year commitment to become the premier retail destination for aging-in-place and life change solutions through the launch of Lowe Livable Home. The company is also expanding its service options to customers seeking reviews of Lowe’s partners and Lowe’s independent service provider network. This central point of contact is intended to help LOW win more customers and strengthen its position in the industry.

Also in November, LOW announced the upcoming launch of Measure Your SpaceBETA, an intuitive, end-to-end space scanning, measuring, and estimating experience on Lowe’s iOS app. The company invests in new technologies such as LiDAR, AI and Mixed Reality to make home improvement easy and intuitive. “We call this Future Spatial Commerce and are excited to offer it to our customers,” said Seemantini Godbole, Executive Vice President and Chief Information Officer, Lowe.

LOW net sales rose 2.7% year-over-year to $ 22.92 billion for the third fiscal quarter ended October 29, and net income increased 174% year-over-year to $ 1.90 billion. And that of the company EPS rose 200% year over year to $ 2.73.

A consensus revenue estimate of $ 20.84 billion for the fourth quarter of fiscal year ending January 2022 shows an improvement of 2.6% over the same period last year. Analysts expect earnings per share of $ 1.69 for the current quarter, an increase of 27.1% year over year. Additionally, LOW outperformed the Street’s EPS estimates for each of the past four quarters.

LOW is up 58.1% over the past year and 32.7% over the past six months to close yesterday’s trading session at $ 257.79.

LOW’s strong fundamentals are reflected in its POWR ratings. LOW has an overall rating of B which is equivalent to buying on our proprietary product POWR ratings System. The POWR ratings are calculated taking 118 different factors into account, with each factor being optimally weighted.

LOW has the grade B for feeling and quality. Among the 61 B-rated stocks Home improvement & goods Industry, LOW is ranked 9th.

In addition to the above, we also rated the growth, value, momentum and stability ratings LOW. Click here to view all LOW ratings.

Mohawk Industries, Inc. (MHK)

MIC in Calhoun, Georgia, designs, produces, procures, sells and markets floor coverings for the renovation and construction of residential and commercial spaces worldwide. It operates in three segments: Global Ceramic; North America flooring (NA flooring) and Rest of the world flooring (ROW flooring).

The company signed The Climate Pledge, a sustainability-oriented initiative, and agreed to integrate climate-sensitive strategies, neutralize remaining emissions through permanent and socially beneficial offsets, achieve net zero-year carbon emissions by 2040, and implement decarbonization strategies.

MHK net sales increased 9.4% year over year to $ 2.82 billion for the third fiscal quarter ended October 2. Operating income increased 37% year over year to $ 359.97 million. Adjusted net income was $ 272.05 million, up 16.8% over the same period last year. And the company’s adjusted earnings per share rose 21.2% year over year to $ 3.95.

Analysts expect MHK’s revenue to grow 17% year over year to $ 11.17 billion in fiscal 2021. The consensus EPS estimate of $ 14.77 for the year indicates a 67.3 percent year-over-year increase. The company has an impressive track record with surprises; it has outperformed consensus EPS estimates for each of the past four quarters.

Last year the stock gained 26.2% in price, closing yesterday’s trading session at $ 180.47.

Unsurprisingly, MHK has an overall rating of B, which corresponds to a purchase rating on our proprietary POWR rating system. MHK also has the grade B for Value, Momentum and Quality. It is ranked 6th in the world Home improvement & goods Industry. Click here to view additional MIC scores for growth, mood, and stability.

LOW shares traded at $ 252.16 per share on Friday morning, down $ 5.63, down 2.18%. Year-to-date, LOW is down -2.45%, compared to a -2.04% increase in the benchmark S&P 500 over the same period.

About the author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to a career as an investment analyst. After completing her master’s degree in economics, she gained knowledge of equity research and portfolio management at Finlatics. More…

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