The home improvement industry is thriving, thanks to growing demand for smart and energy-efficient solutions and advancements like visualization apps and 3D software. Moreover, with the rise of smart homes and increased security needs driven by IoT and AI, the sector is booming.
So, investors could keep track of quality home improvement stocks Masco Corporation (MAS), National Presto Industries, Inc. (NPK), and Haverty Furniture Companies, Inc. (HVT) for massive gains. These stocks also pay stable dividends.
The home improvement sector is set for long-term growth, driven by escalating urbanization, decreasing inflation and a growing appetite for smart, energy-efficient remodeling options. Rising rates of homeownership have also driven growth in the home improvement category in recent years.
Rising demand for home remodeling services is expanding the market, while technological advancements are revolutionizing the industry, offering homeowners a wide array of innovative tools and materials to create their ideal homes.
The home improvement sector is also booming thanks to the growing interest in smart homes and heightened security needs. Advancements like the Internet of Things (IoT), AI, visualization apps, and 3D software are shaping market trends. The global home improvement market is projected to grow at a CAGR of 6.7%, reaching $574.57 billion by 2030.
Furthermore, propelled by an increasing desire for sustainable products and the integration of technology to offer personalized and convenient designs, reflecting a shift towards wellness and environmental awareness, the U.S. home decor market is projected to grow at a CAGR of 4.1% to reach $180.39 billion by 2030.
Given the industry tailwinds, it's time to examine the fundamentals of the top three stocks to watch in the B-rated Home Improvement & Goods industry, starting with the third in line.
Stock #3: Masco Corporation (MAS)
MAS designs, manufactures, and distributes home improvement and building products internationally. The company operates in two segments: Plumbing Products Segment and Decorative Architectural Products Segment.
MAS’ trailing-12-month EBIT margin of 17.17% is 77.9% higher than the industry average of 9.65%. Its 12.56% trailing-12-month levered FCF margin is 93.1% higher than the industry average of 6.50%.
On February 8, MAS declared a quarterly dividend of $0.29 per share, a 2% increase from the previous year, payable on March 11, 2024. The company pays an annual dividend of $1.16, which yields 1.59% on the current market price.
In the fiscal fourth quarter that ended on December 30, 2023, MAS’ net sales came in at $1.88 billion. Its gross profit rose 19.8% year-over-year to $653 million. The company’s net income increased 58.7% year-over-year to $200 million, and its EPS stood at $0.85, up 66.7% over the prior-year quarter.
For the fiscal year 2024, MAS’ EPS and revenue are expected to increase 7% and marginally year-over-year to $4.13 and $8.03 billion, respectively. It surpassed the consensus EPS and revenue estimates in each of the trailing four quarters, which is notable.
Over the past nine months, the stock has gained 42.2% to close the last trading session at $73.16. It is currently trading above its 50-day and 200-day moving averages of $67.91 and $58.74.
MAS’ POWR Ratings reflect its promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Quality. It is ranked #15 among 56 stocks in the B-rated Home Improvement & Goods industry.
To see MAS’ Growth, Value, Momentum, Stability, and Sentiment ratings, click here.
Stock #2: National Presto Industries, Inc. (NPK)
NPK provides housewares and small electric appliances, defense and safety products in North America.
NPK’s trailing-12-month ROTA of 5.67% is 17% higher than the industry average of 4.84%. Its trailing-12-month levered FCF margin of 7.12% is 9.5% higher than the industry average of 6.50%.
It pays an annual dividend of $1, which yields 1.28% on the current market price.
NPK’s net sales came in at $83.14 million for the fiscal third quarter that ended September 30, 2023, up 19.3% year-over-year. The company’s net earnings and EPS stood at $7.02 million and $0.99. As of September 30, NPK reported cash and cash equivalents of $70.41 million, compared to $61.78 million in the year-ago period.
NPK’s shares have gained 8.5% over the past year to close the last trading session at $78.24. It's currently trading above its 200-day moving average of $76.59.
NPK’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
NPK has a B grade for Value and Momentum. It is ranked #14 in the same industry.
Click here for the additional POWR Ratings for Stability, Growth, Sentiment, and Quality for NPK.
Stock #1: Haverty Furniture Companies, Inc. (HVT)
HVT is a specialty retailer of residential furniture and accessories in the United States. The company offers furniture merchandise under the Havertys brand name. It also provides custom upholstery products and eclectic looks, mattress product lines under the Tempur-Pedic, Serta, Sealy, Stearns, and Foster names, as well as the private label Skye name.
HVT’s trailing-12-month ROCE and ROTA of 21.68% and 9.61% are 88.9% and 130.4% higher than the industry averages of 11.48% and 4.17%, respectively.
The company’s annual dividend of $1.20 translates to a 3.32% yield on current prices, while its four-year average dividend yield is 8.35%.
In the fiscal third quarter (ended September 30, 2023), HVT’s net sales came in at $220.35 million. Its gross profit stood at $134 million. The company generated an EPS of $1.02. Moreover, for the nine months ended September 30, HVT’s operating cash flow rose 107.9% year-over-year to $79.40 million.
Analysts expect HVT’s revenue and EPS to increase 1.2% and 5.4% year-over-year to $894.49 million and $3.64, respectively, in the fiscal year 2024.
HVT’s shares have gained 45.9% over the past nine months to close the last trading session at $36.15. It is currently trading above its 50-day and 200-day moving averages of $34.66 and $31.01.
It’s no surprise that HVT has an overall rating of B, which equates to Buy in our proprietary rating system. It has a B grade for Quality and Value. In the same industry, it is ranked #13.
Beyond the POWR Ratings we’ve stated above, we also have HVT’s ratings for Growth, Momentum, Stability, and Sentiment. Get all HVT ratings here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
MAS shares were trading at $73.16 per share on Monday morning, down $0.32 (-0.44%). Year-to-date, MAS has gained 9.23%, versus a 5.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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