The home improvement industry has boomed amid the COVID-19 pandemic, with people spending more time at home and taking on more do-it-yourself (DIY) home renovation activities. This momentum is expected to be sustained through the coming months. In fact, according to a recent survey by DEWALT, more than 70% of U.S. homeowners are planning a home renovation project before the end of the year.
Furthermore, as COVID-19 omicron variant-led cases surge, the hybrid work culture is expected to continue. This is expected to boost the home improvement industry’s growth. According to a Research and Markets report, the home improvement services market is expected to reach $585.30 billion by 2030, growing at a 6.2% CAGR.
So, we think it could be wise to add quality home improvement stocks The Home Depot, Inc. (HD) and Lowe’s Companies, Inc. (LOW) to one’s portfolio now. They have been making new 52-week highs recently, and they have an overall B (Buy) rating in our proprietary POWR Ratings system.
The Home Depot, Inc. (HD)
Home improvement retailer, HD in Atlanta, Ga., sells various building materials, home improvement products, and lawn and garden products. It is the world’s largest home improvement retailer, operating roughly 2,300 stores across the U.S., Canada, and Mexico.
On November 16, 2021, Craig Menear, HD’s chairman and CEO, said, “As evidenced by our strong performance in the quarter, our team continues to do an outstanding job of operating with flexibility and agility. Ultimately, this is what has allowed us to respond to the elevated home improvement demand that has persisted. I would like to extend my sincere appreciation to our team, as well as our supplier, supply chain, and transportation partners, as we continue to navigate this dynamic environment together.”
For its third fiscal quarter, ended October 31, 2021, HD’s net sales increased 9.8% year-over-year to $36.82 billion. The company’s net earnings came in at $4.13 billion, representing a 20.3% year-over-year rise. In addition, its EPS increased 23.3% year-over-year to $3.92.
Analysts expect HD’s revenue to be $150.17 billion in its fiscal year 2022, representing a 13.7% year-over-year increase. The company’s EPS is expected to rise 29.5% year-over-year to $15.46 in the current year. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 53.2% in price to close yesterday’s trading session at $405.24. It is currently trading 3.7% below its 52-week high of $420.61, which it hit on December 6, 2021.
HD’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
In addition, it has a B grade for Sentiment and Quality. HD is ranked #24 of 61 stocks in the Home Improvement & Goods industry. Click here to see the additional POWR Ratings for HD (Growth, Value, Momentum, and Stability).
Lowe’s Companies, Inc. (LOW)
Together with its subsidiaries, LOW operates as a home improvement retailer in the United States and internationally. The company offers construction, maintenance, repair, remodeling, and decorating products. LOW is headquartered in Mooresville, N.C.
On November 8, 2021, LOW announced the launch of Measure Your Space, Lowe’s vision for spatial commerce, an intuitive, end-to-end room scanning, measurement, and estimating experience in its iOS app. This is expected to diversify the company’s existing product portfolio.
LOW’s net sales increased 2.7% year-over-year to $22.92 billion for its fiscal third quarter, ended October 29, 2021. The company’s net earnings came in at $1.90 billion, up 174% year-over-year. Also, its EPS increased 200% from the same period last year to $2.73.
For its fiscal year 2022, analysts expect LOW’s revenue and EPS to increase 6.8% and 34.9% year-over-year to $95.65 billion and $11.95, respectively. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 63% in price to close yesterday’s trading session at $257.24 after hitting its 52-week high of $263.31.
LOW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. It has a B grade for Sentiment and Quality. Within the Home Improvement & Goods industry, it is ranked #6. Click here to see the additional POWR Ratings for Growth, Value, Momentum, and Stability for LOW.
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HD shares were trading at $401.22 per share on Tuesday morning, down $4.02 (-0.99%). Year-to-date, HD has gained 54.21%, versus a 24.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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