The global home improvement and goods market is thriving with rapid urbanization, rising disposable income, and a strong demand for design innovations, leading to increased spending on remodeling and renovation projects.
Therefore, investors could consider adding top home goods stocks The Home Depot, Inc. (HD), The Sherwin-Williams Company (SHW), Lowe's Companies, Inc. (LOW), and Snap-on Incorporated (SNA) to their watchlist for investing in 2024.
Personal income rose by $81.6 billion (0.4% monthly increase), with disposable personal income (income after taxes) increasing by $71.9 billion (0.4%) in November. Additionally, personal consumption expenditures (spending) increased by $46.7 billion (0.2%) last month.
Increased disposable income and a growing emphasis on aesthetic improvements, alongside the rise of smart home trends and pandemic-driven outdoor beautification, are fueling growth in the residential remodeling market.
In addition, anticipated growth in the U.S. residential remodeling market for 2023 is underpinned by factors such as the availability of tax credits, sustained investments from high earners, a reduction in backlog jobs, and potential decreases in material prices, notably for steel and lumber.
The industry benefits from the adoption of alternative materials and home systems, contributing to its expansion. The U.S. home improvement market is anticipated to grow with a CAGR of 4.5% until 2028. Moreover, the revenue of the global home improvement and goods market is predicted to grow at a CAGR of 6.7% to reach $575.5 billion by 2030.
Considering these conducive trends, let’s examine the fundamentals of four Home Improvement & Goods stock picks, beginning with the fourth choice.
Stock #4: The Home Depot, Inc. (HD)
HD functions as a home improvement retailer, offering a diverse range of building materials, home products, and installation services. It serves both homeowners and professionals, providing a variety of products online and through its physical stores.
On November 20, HD acquired International Designs Group (IDG), aiming to bolster its capabilities in serving professional contractors engaged in renovation and remodeling projects.
The deal includes Construction Resources, a leading distributor of design-oriented surfaces and architectural specialty products. The acquisition is focused on capturing a larger share of the $475 billion Pro spend market.
In the third quarter, which ended October 29, 2023, HD’s net sales and gross profit stood at $37.71 billion and $12.74 billion, respectively. The company reported operating income and EPS of $5.41 billion and $3.81, respectively. As of October 29, 2023, its total liabilities amounted to $74.15 billion, compared to its previous-year quarter total liabilities of $75.57 billion.
Street expects HD’s revenue and EPS to grow 1.6% and 3.8% year-over-year to $155 billion and $15.66, respectively, for the fiscal year ending January 2025. The company surpassed the EPS estimates in each of the trailing four quarters, which is impressive.
HD’s shares have gained 23.9% over the past nine months and 15.5% over the past five months to close the last trading session at $348.53.
HD’s POWR Ratings reflect its positive prospects. 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.
HD has a B grade for Momentum, Stability, Sentiment, and Quality. Within the B-rated Home Improvement & Goods industry, it is ranked #23 among 57 stocks.
In addition to the POWR Ratings stated above, one can access HD’s additional Growth and Value ratings here.
Stock #3: The Sherwin-Williams Company (SHW)
SHW is a global company specializing in manufacturing, distributing, and selling paints, coatings, and related products. Operating through three segments, it serves professional, industrial, commercial, and retail customers worldwide.
On December 8, SHW declared a regular quarterly dividend of $0.61 per common share, payable on. The company pays a dividend of $2.42 annually, which translates to a yield of 0.77% on the prevailing price level. Its four-year average dividend yield is 0.86%.
The company has raised its dividend payouts at a CAGR of 10.6% and 16.1% over the past three and five years. Moreover, the company boasts a 45 year record for consecutive years of dividend growth.
During the third quarter ended September 30, 2023, SHW reported net sales of $6.12 billion, up 1.1% year-over-year. The company's net income grew 11.2% from the previous-year quarter to $761.50 million. It reported adjusted EBITDA of $1.27 billion. Moreover, its adjusted net income per share increased 13.1% from the prior-year quarter to $3.20.
SHW’s revenue is expected to grow marginally year-over-year to $6.28 billion for the second quarter ending June 2024. Its EPS for the same period is expected to increase 4.6% from the prior-year quarter to $3.44. The company surpassed the EPS estimates in each of the trailing four quarters.
SHW’s shares increased 46.4% over the past nine months and 32% year-to-date to close the last trading session at $313.27.
SHW’s POWR Ratings reflect this sound outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Sentiment and Quality. Within the same industry, it is ranked #22.
Click here for SHW’s additional Growth, Value, Momentum, and Stability ratings.
Stock #2: Lowe's Companies, Inc. (LOW)
LOW is a prominent U.S. home improvement retailer offering a wide array of products for construction and renovation. The company serves both professional customers and homeowners through its stores, website, and mobile applications.
On November 29, Lowe's and the Charlotte Hornets extended their partnership, focusing on community projects like renovating an amphitheater in Grier Heights Park through the Hornets Legacy Project Powered by Lowe's.
The collaboration also welcomes basketball legend Muggsy Bogues to the LOW's Home Team, reinforcing its commitment to community service and fan engagement.
In the third quarter ended November 3, 2023, LOW generated net sales of $20.47 billion. The company's operating income and net earnings amounted to $2.70 billion and $1.77 billion, up 191.8% and significantly year-over-year, respectively. Also, its EPS increased significantly from the prior-year quarter to $3.06.
The company projects a full-year 2023 outlook with total sales of around $87 billion to $89 billion, an adjusted operating margin of approximately 13.3%, and an adjusted EPS of about $13.
Analysts expect LOW’s EPS to grow 1.8% year-over-year to $13.26 for the fiscal year ending January 2025. Its revenue is expected to be $86.10 billion for the same year. The company surpassed the EPS estimates in each of the trailing four quarters.
The stock has gained 17% over the past nine months and 11.9% year-to-date to close the last trading session at $222.89.
LOW’s optimistic outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has a B grade for Growth, Momentum, and Quality. Within the same industry, it is ranked #21.
To see LOW’s additional POWR Ratings for Value, Stability, and Sentiment, click here.
Stock #1: Snap-on Incorporated (SNA)
SNA is a global manufacturer of tools and equipment for professional users, providing hand and power tools, diagnostic products, and financing support. The company serves diverse industries, including aviation, agriculture, construction, and government.
On November 7, SNA acquired Mountz, Inc. for approximately $40 million in cash, enhancing Snap-on's offerings in aerospace and advanced manufacturing. The acquisition expands SNA's capabilities in electric vehicle battery assembly and microelectronic component fabrication.
In the third quarter, which ended September 30, 2023, SNA reported net sales and gross profit of $1.16 billion and $578.20 million, up 5.2% and 8.6% year-over-year, respectively. The company's net earnings and net earnings per share attributable to SNA grew 8.5% and 8.9% from the previous-year quarter to $249.10 million and $4.51, respectively.
SNA’s revenue and EPS are expected to grow 3.9% and 5.3% year-over-year to $1.20 billion and $4.65 for the fourth quarter ending December 2023, respectively. The company surpassed the revenue and EPS estimates in each of the trailing four quarters.
SNA’s shares increased 26.3% over the past year and 27% year-to-date to close the last trading session at $290.19.
SNA’s POWR Ratings reflect this positive outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has an A grade for Quality and a B for Momentum and Stability. Within the same industry, it is ranked #9.
Click here for SNA’s additional Growth, Value, and Sentiment ratings.
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.
HD shares were trading at $346.73 per share on Thursday afternoon, down $1.80 (-0.52%). Year-to-date, HD has gained 12.83%, versus a 26.66% 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.
4 Dynamic Home Goods Stocks to Buy in 2024 StockNews.com
