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2 Home Improvement Stocks to Buy in September, 2 to Avoid

Stock MarketsSep 02, 2021 11:30AM ET
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© Reuters. 2 Home Improvement Stocks to Buy in September, 2 to Avoid

A substantial rise in new-home purchases, and the growing popularity of DIY and smart home technologies, have contributed significantly to the growth of the home improvement industry. So, we think fundamentally strong stocks in this space, Lowe's Companies (NYSE:LOW) and Mohawk Industries (NYSE:MHK), are worth betting on now. Conversely, Home Depot (NYSE:HD) and Sherwin-Williams (SHW) don’t look well-positioned to capitalize on the industry tailwinds. Their bleak financials make the stocks of these two companies best avoided now. Read on.Home improvement trends have changed markedly over the past year because the COVID-19 pandemic sparked an unprecedented tidal wave of housing projects, with homeowners spending more time at home than they did prior to the public health crisis. In addition, the high demand for residential properties amid a low-interest-rate environment and the increasing popularity of smart home technology features have been among the factors driving the growth of the home improvement industry.

The global home improvement services industry is expected to reach $585.3 billion by 2030, exhibiting a 6.2% CAGR from 2021. And the home improvement market is also changing its sales approach in response to the shift to digital platforms. As such, we believe fundamentally sound home improvement stocks Lowe's Companies, Inc. (LOW) and Mohawk Industries, Inc. (MHK) are well-positioned to cash in on the industry’s robust growth potential.

Conversely, with consumer discretionary spending shifting toward entertainment and travel as pandemic restrictions ease amid a rapid vaccine rollout, we think fundamentally weak companies in this space, The Home Depot, Inc. (HD) and The Sherwin-Williams Company (NYSE:SHW), might struggle to grow.

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2 Home Improvement Stocks to Buy in September, 2 to Avoid
 

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