Home improvement stocks fared strongly last year, thanks to the pandemic that gave a boost to home buying and home-improvement activities. Halfway through 2021, home improvement players are still seeing rise in demand. Despite the ease on pandemic restrictions and rising outdoor movement, Americans continue to incline toward home renovation and maintenance projects. The prolonged indoor stint this past year made people realize the importance of homes. Industry experts opine that consumers’ discretionary spending on home are likely to continue as interests of keeping houses well maintained are here to stay, even post pandemic.

Home improvement products retailers have been gaining from consumers’ investments in making homes an enjoyable and comfortable place. Revamping interiors to facilitate continued work-from-home and remote schooling needs is a major trend. Do-it-yourself (DIY) projects for remodeling, decorating as well as maintenance of furniture and fixtures have been gaining popularity. Companies in the home improvements products space have been witnessing higher demand for gardening tools as well as products related to indoor hobbies like tool kits and paint.

Favorable housing market conditions, characterized by high home-buying activities, are a boon for retailers catering to home improvement needs. Low mortgage rates and high demand for residential property have been driving the housing market. Rapid urbanization trends also continue to remain an upside for players in this space. Development of real estate projects and expansion of cities and towns have kept the demand favorable for home decor items as well as tools and equipments.

Home improvement products retailers have been also witnessing a surge in online business transactions, thanks to growing digital dependency. This is helping companies to tap on robust demand conditions prevailing in the market. Industry participants are investing toward boosting omni-channel capabilities, including online ordering and delivery services.

Given the positives prevailing in the home improvements industry, investors may consider investing in stocks from this space. We have highlighted four such companies, which are gaining from their business-expansion endeavors and favorable market trends.

4 Prominent Picks

First on our list is the leading home improvements retailer — The Home Depot, Inc. HD. The company has been gaining from increased renovation and construction projects. It is ramping up assortments and delivery systems to effectively meet market needs. Home Depot follows a flexible interconnected infrastructure, which helps it adapt to changing customer preferences. This Zacks Rank #2 (Buy) company is gaining from broad-based strength across stores and geographies as well as growing presence in the digital arena. The company is working toward boosting omni-channel functions such as curbside pickup and buy online pickup in store services with convenient pickup lockers. The stock has gained about 29% in a year. The Zacks Consensus Estimate for fiscal 2021 earnings has moved up 0.7% in the past 30 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Beacon Roofing Supply, Inc. BECN, with a Zacks Rank #2, is another potential pick. This roofing materials distributor is gaining from improved demand for residential products. Moreover, its investments in boosting technology infrastructure are supporting growth in the e-commerce platform. Its new OTC (On-Time and Complete) Delivery Network and newly-designed website are driving in-store and online customers with enhanced product availability, delivery tracking and notifications. The company is also committed toward cost-management efforts. Shares of Beacon Roofing Supply have surged 118.4% in a year. The Zacks Consensus Estimate for fiscal 2021 earnings has remained stable in the past 30 days.

One-Year Price Performance

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Builders FirstSource, Inc. BLDR is a Dallas, TX-based supplier and manufacturer of building materials. The company is gaining from higher demand for its integrated services, backed by improved housing market and shift to suburban living. This Zacks Rank #2 company has been active on the acquisition front, which is supporting the top line. It is also focusing on cost-management practices. The Zacks Consensus Estimate for 2021 has remained stable in the past 30 days. Impressively, the stock has surged about 126.2% in the past year.

Investors may also consider investing in Fastenal Company FAST. This Winona, MN-based wholesale distributor of industrial and construction products is gaining from the installation of vending machines. Further, this Zacks Rank #2 company is striving to boost onsite locations portfolio. The company also implemented prudent cost-control measures to curtail pressure stemming from rising operating expenses. Fastenal is also working toward expanding e-commerce presence. Notably, the stock has increased about 24.5% in a year. The Zacks Consensus Estimate for 2021 earnings has remained stable in the past 30 days.

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