2020 was mainly characterized by social-distancing and remain-at-home restrictions, all because of Covid-19. More time spent indoors made most people concentrate on making homes an enjoyable and comfortable place.
Plus, with work-from-home and shelter-in-place practices, many homebound consumers have changed their attention to DIY projects. This trend has pushed the demand and supply for home improvement products. In fact, the Home Improvement Index has soared up to 30%.
Leading DIY improvement stores have also reported more sales growth in the past few months. As a result, these stores are well-positioned to benefit greatly from the power of homebuilding activity and DIY trends.
Given the increased valuations of DIY stores’ stocks, most investors might want to wait patiently until a pullback establishes an entry point. But, before then, you might want to take advantage of these trending DIY stores stocks:
- Home Depot (HD)
Home Depot serves as a home improvement store, targeting professional and DIY customers. Although this company’s bottom line decreased by around 8% because of the increased costs during the pandemic, its profit grew by 7% through its digital channels and warehouse-format stores.
Apart from offering a 2.5% dividend yield, Home Depot trades 53% higher and has a $269 billion market capitalization. As a matter of fact, a current pullback in Home Depot stock offers a purchasing opportunity at around $240 level.
According to market analysts, a new uptrend is also in place, so if you want to secure wealth for retirement, you need to implement a trailing stop to allow more profits to run.
- Lowe’s (LOW)
Lowe’s company fixed its weak digital program before the global pandemic, enabling it to benefit from DIY home improvement trends. According to the reports, the total sale was still lower than that of Home Depot, but customers are responding positively, and it’s trying to catch up.
Why are most customers happy?
For one, in the Q3, Lowe’s invested around $100 million to improve various operations, like redesigning layouts of the store to shelve the right products next to one another. The store also has a solid program, which secures the market. Both in the long and short-term, you may expect to see more from Lowe’s
- Wayfair (W)
Although brick-and-mortar stores across the globe have been forced to absorb losses and shut down, online retails, such as Wayfair, have become more lucrative or profitable. Wayfair offers customers with every home furnishing they will require, and new clients have flocked to the store in record numbers.
In the Q2, the store recorded almost 5 million new customers, which is basically more compared to previous four quarters when combined. These new customers contributed significantly to an 84% YOY increase in revenue, translating to non-generally accepted accounting principles (GAAP) EPS of around $3.2.
According to the IBD Stock Checkup tool, Wayfair boasts a three-year sales increase rate of around 45%. Wayfair also recorded the Q1 adjusted earnings of approximately $1.1 a share, as revenue increased to around $3.5 billion, beating forecasters’ views for 3.4 billion.
However, now analysts are more confident and almost certain that customers will concentrate on their homes, even as things normalize in Europe and the US.
- Ulta Beauty (ULTA)
Tapping into home improvement trends of providing great experiences to attract customers into the stores, Ulta provides an in-store salon treatment to shoppers. The idea has taken off, and the stores are attracting many clients before the global pandemic struck.
According to InvestorsObserver’s ranking system, ULTA stock now has a score of around 75% out of 100. This rank is determined by short-term scores of 94. Apart from this average rating, Wall Street analysts suggest that ULTA stock has a target price of approximately $345. This clearly shows that analysts expect the stock to rise by 12% in the next 12 months.
The world’s urban population is anticipated to reach 3 billion by 2040. In fact, most urban dwellers have already shown an inclination to DIY projects in both home automation and improvement.
As Covid-19 still restricts many people from moving around, homeowners may now invest most of their time in do-it-yourself projects, which drives the market. At the same time, you can secure your wealth through DIY stores’ stocks, hoping to profit from coronavirus rebound.