4 Stocks Being Buoyed by Good Housing News
Just as a rising tide floats all boats, positive housing reports lift not only homebuilders' stocks, but those of companies that are less visibly involved in a rebounding housing market, such as cabinet and flooring installers and roofing contractors. If you are still unconvinced that housing is making a comeback, read on for some uplifting news from some companies that can be counted on to perk up right alongside a brightening housing picture.
Masco (NYS: MAS) is a global manufacturer of home products such as cabinets and plumbing products, as well as installation services. The company recently produced an improved first-quarter report after three years of depressed business activity. Importantly, the increase in revenue represents more business from an uptick in housing starts, particularly in North America, where the majority of the company's business is generated. Another good sign is that Masco was able to nearly double its operating profit margins year over year, from 3.3% to 6%.
Every new house needs flooring, and two companies have been nailing down some improving numbers so far this year. Mohawk Industries (NYS: MHK) produces a large variety of flooring products for homes and businesses in the U.S., as well as covering the European residential market. Its recent earnings report showed a profit increase, rather than a decrease, for the first time in nearly a year. Although at least some of the profit increase was due to price increases, management reported increased sales in its Dal-Tile division.
Similarly, Interface (NYS: IFSIA) , a carpet tile manufacturer, has also seen its business pick up this year, as it slowly claws its way back from a lackluster year. Although the company didn't make huge strides in the sales and revenue departments, it did report some very good news: Orders outstripped sales in the first quarter, resulting in a $13 million backlog for that time period.
To top it all off, Beacon Roofing (NYS: BECN) has been doing pretty well, having enjoyed a lift from the especially warm winter. The ability to increase prices helped bump up the company's profit margins, and cash flow increased by 14% from this time last year.
For Masco and Interface, a rebound in housing has had a direct effect upon their sunnier financial profiles already, and they should continue to experience an improving business climate as long as housing data remains positive. A better housing picture can only help Mohawk and Beacon, too, both of which will certainly be beneficiaries of new housing starts. If the recent auction of bundled foreclosure properties by Fannie Mae to large investor groups works out well, there should be plenty of work to go around in the renovation field, as well. When it comes to playing the housing investment market, these four companies are well worth keeping an eye on.
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At the time this article was published Fool contributorAmanda Alixowns no shares in the companies mentioned above.The Motley Fool owns shares of Interface. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.