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The Housing Market Is on a Hot Streak. These Stocks Aren’t—but Could Be Soon

Whether you think the housing market is peaked or still has room to grow, there are stocks that could benefit. They are the ones that investors are looking at when they make investment decisions.

During the housing boom in the mid-2000s, investors who bought at the bottom discovered great amounts of value. Their home values soared during the same period, and their profits far exceeded their initial investment. The majority of homes that hit the market during the downturn did so at a lower price and offer great investment potential.

Today’s housing market is looking more like the boom. The National Association of Realtors says that the pace of home purchases in May hit a ten-year high. In fact, home sales are up over 6% compared to this time last year. And home prices have risen slightly too, so renters can expect the same type of gains they did in the 1990s.

This has led to talk that the last great housing bubble may be forming again. And there are stocks that could benefit from this speculation. The National Association of Realtors says that to keep prices from soaring too high, the market could tighten and the supply of houses on the market could shrink, both of which should push prices down.

Investors can take advantage of this by buying high-quality companies that have a good distribution of revenue. While the market is on fire, it could draw more homeowners to buy their first home. Buying a home has the potential to be quite a rewarding investment.

One of the strongest sectors that is in the market right now is the nation’s home-improvement retailers, including Home Depot and Lowe’s. These companies are currently experiencing huge demand. Both stocks are trading at current multi-year highs.

Home Depot is the world’s largest home-improvement retailer and offers a variety of services that are not available at most retail stores. It serves the full spectrum of home improvement needs. It offers lawn, garden, pest, appliances, flooring, paint, hardware, outdoor power tools, home audio equipment, tools, garden items, pool, basketball and tennis courts, and swimming pools. It offers complete repair services at its stores, such as vacuuming and putting new stucco on the house.

Although Home Depot doesn’t release its profits, the company is the home-improvement industry’s behemoth, and is the top-producing retailer in the U.S.

Lowe’s operates home improvement stores with the same breadth of offerings as Home Depot but focus on building and maintaining houses. Lowes also offers customers other services, such as being able to install appliances at a Lowe’s location. This means that Lowes has broad offerings that can appeal to homeowners as well as vacation owners.

Both companies are forecasting healthy sales for the year, even as housing sales speed up. They may continue that momentum in the coming months as the market tightens and rents rise.

As a result, both home-improvement retailers are trading above their all-time highs. While Lowe’s hasn’t approached the highs it set in the early 2000s, Home Depot is trading at more than three times its 2005 highs. The upside potential is in these stocks. Investors who know how to pick winners could set themselves up for huge gains.

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