The U.S. housing market is currently going through a difficult time as housing inventory is reaching below historical averages, resulting in tight supply and surging house prices, which are discouraging many aspiring home buyers from affording a home. Also, high mortgage rates have adversely impacted the market further.
Given the industry tailwinds, it could be wise to invest in fundamentally sound stocks Snap-on Incorporated (SNA), Owens Corning (OC), and Cavco Industries, Inc. (CVCO) for potential gains this month.
Various industrial, home building, and home improvement companies are seeing the current situation as a lucrative opportunity to offer innovative products to customers and leverage the industry dynamics in their favor. Also, experts believe that in 2025, home prices will increase at a slower pace, and mortgage rates will also ease. This will act as a ray of light for homebuyers.
After concluding 2024 on a negative note, with home sales down 0.2%, it is predicted that home sales will increase by 3% in 2025. Further, the rising home prices could possibly influence homeowners to spend more on home renovations and power personal consumption, driving the market.
Besides, the housebuilding market is projected to grow from $6.78 trillion in 2025 to $11.56 trillion by 2034, exhibiting growth at a CAGR of 6.1%. The growth in the market is driven by the demand for more housing units owing to the growing population and urbanization.
Further, aspects like the high demand for home renovations and improvements and, consequently, growing demand for building materials and skilled labor are also key contributors to the market’s prospects.
Given the favorable industry trends, investing in quality stocks such as SNA, OC, and CVCO, which are benefiting from America's housing shortage, could be wise.
Let’s discuss the fundamentals of these stocks in detail:
Snap-on Incorporated (SNA)
SNA globally manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users. It operates in segments like Commercial & Industrial Group; Snap-on Tools Group; Repair Systems & Information Group; and Financial Services. It offers hand tools, including wrenches, sockets, ratchet wrenches, pliers, screwdrivers, punches, and chisels.
On February 13, 2025, SNA’s board of directors declared a quarterly common stock dividend of $2.14 per share. The dividend will be paid on March 10, 2025, to shareholders of record at the close of business on February 24, 2025.
SNA pays an annual dividend of $8.56, which translates to a yield of 2.55% at the current share price. Its four-year average dividend yield is 2.41%. Moreover, the company’s dividend payouts have increased at a CAGR of 14.7% over the past three years. Snap-on has raised its dividends for 15 consecutive years.
For the fourth quarter that ended December 31, 2024, SNA’s net sales grew marginally year-over-year to $1.20 billion. Its gross profit rose 3.2% from the year-ago value to $596.10 million. The company’s operating earnings were $331.90 million, up 1.9% from the previous year’s quarter.
In addition, net earnings attributable to Snap-on Inc. stood at $258.10 million or $4.82 per share, indicating increases of 1.1% and 1.5% from the prior year period, respectively.
Street expects SNA’s EPS and revenue for the first quarter (ending March 2025) to increase 1.5% and 1.4% year-over-year to $4.82 and $1.20 billion, respectively. Moreover, the company surpassed the consensus EPS estimate in three of the trailing four quarters.
Shares of SNA have gained 18.7% over the past six months and 23.9% over the past year to close the last trading session at $335.98.
SNA’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Quality. It also has a B for Stability and Momentum. It is ranked #7 out of 55 stocks in the Home Improvement & Goods industry.
Click here to access additional SNA ratings for Sentiment, Value, and Growth.
Owens Corning (OC)
OC is engaged in the provision of residential and commercial building products internationally. The company operates through four segments: Roofing; Insulation; Doors; and Composites. The company manufactures and sells residential roofing shingles, oxidized asphalt materials, and roofing components primarily used in residential and commercial construction.
On February 14, 2025, OC signed a definitive agreement with Praana Group, an India-based holding group that serves the industrial sector, for the sale of OC’s glass reinforcements business to Praana Group (through its subsidiaries) for $755 million. The transaction was effected as part of OC’s strategic plan to reshape its focus on residential and commercial building products.
On February 11, 2025, OC announced an investment in shingle manufacturing capacity, adding a new facility in the southeastern United States. The strategic investment expands the company's roofing manufacturing network and advances its ability to meet the growing demand for its shingles.
During the fourth quarter that ended December 31, 2024, OC reported net sales of $2.84 billion, representing a growth of 23.3% from the previous year’s quarter. Its gross margin reached $799 million, up 29.9% from the prior year’s quarter. The company’s adjusted EBITDA increased 21.4% year-over-year to $629 million.
Furthermore, OC’s adjusted earnings amounted to $280 million or $3.22 per share for the quarter, respectively.
Street expects OC’s revenue for the first quarter (ending March 2025) to increase 9% year-over-year to $2.51 billion, while its EPS for the same period is expected to be $2.91. Moreover, it surpassed the consensus EPS estimates in all four trailing quarters.
OC’s shares have gained 10.6% over the past year to close the last trading session at $162.89.
OC’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade for Growth and Sentiment. Within the Industrial - Building Materials industry, OC is ranked #5 of 42 stocks.
In addition to the POWR Ratings we’ve stated above, we also have OC ratings for Value, Momentum, Stability, and Quality. Get all OC ratings here.
Cavco Industries, Inc. (CVCO)
CVCO designs, produces, and retails factory-built homes. The company operates in two segments: Factory-Built Housing and Financial Services. It markets its factory-built homes under brands including Cavco, Fleetwood, Palm Harbor, Nationwide, Fairmont, Friendship, Chariot Eagle, Destiny, Commodore, Colony, Pennwest, R-Anell, Manorwood, MidCountry, and Solitaire.
CVCO’s trailing-12-month EBIT margin of 9.79% is 21.1% higher than the industry average of 8.08%. Likewise, the stock’s trailing-12-month net income margin of 8.75% is significantly higher than the industry average of 4.31%. Also, its trailing-12-month levered FCF margin of 5.67% is 22.7% higher than the 4.62% industry average.
In the third quarter that ended December 28, 2024, CVCO’s net revenue increased 16.8% year-over-year to $522.04 million. Its gross profit grew 26.1% year-over-year to $129.95 million. Also, the company’s income from operations rose 61% from the year-ago value to $63.97 million.
Furthermore, net income attributable to Cavco common stockholders came in at $56.46 million or $6.90 per share, up 56.9% and 61.6% from the prior year’s quarter, respectively.
Analysts expect CVCO’s revenue for the fourth quarter (ending March 2025) to increase 22% year-over-year to $512.49 million. The consensus EPS estimate of $5.89 for the ongoing quarter reflects a 46.2% improvement year-over-year. Also, the company topped the consensus revenue estimates in three of the trailing four quarters.
CVCO’s stock gained 28.2% over the past six months and 41.6% over the past year to close the last trading session at $518.32.
CVCO’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Sentiment and a B grade for Growth and Quality. CVCO is ranked #2 of 23 stocks within the Homebuilders industry.
To see additional POWR Ratings of CVCO for Value, Stability, and Momentum, Click here.
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SNA shares were trading at $338.74 per share on Tuesday afternoon, up $2.76 (+0.82%). Year-to-date, SNA has gained 0.42%, versus a 1.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
3 Stocks Profiting From America’s Housing Shortage StockNews.com
