Home Builders Have Already Rallied – Alternative Ways to Play Housing’s Recovery

The notoriously bearish S&P/Case-Shiller housing index has recently shown some signs of life. And housing starts are on the uptick as well.

Case-Shiller Home Price Index: Composite 10 Chart

Case-Shiller Home Price Index: Composite 10 data by YCharts

That’s set off a new round of murmurings that this time, for real, the housing market may in fact be officially pulling itself off the mat.

Home builders have already had a nice run of late, suggesting the first leg of rebound money has already been made.

PHM Chart

PHM data by YCharts

Getting less investor attention is the fact that households are spending more on furniture and furnishings.

US Furniture and Home Furnishings Store Sales Chart

US Furniture and Home Furnishings Store Sales data by YCharts

Ethan Allen (ETH), and Pier 1 (PIR) are still trading at pretty nice valuations -- based on PE ratio -- despite strong gains over the past year.

ETH Chart

ETH data by YCharts

PIR Chart

PIR data by YCharts

As HGTV has taught millions over the years, the least expensive way to spruce up a home is to slap on some paint. That’s worked out quite well for Sherwin-Williams (SHW) of late.

SHW Revenue Chart

SHW Revenue data by YCharts

Unfortunately, Sherwin-Williams’ PE ratio has shot up about as fast as its price.

SHW Chart

SHW data by YCharts

For a less-direct way to invest in the home-spending rebound, check out Berkshire Hathaway (BRK.B). Among its wholly-owned subsidiaries are paint company Benjamin Moore, Acme Bricks, Nebraska Furniture Mart, Jordan’s Furniture, R.C. Willey Home Furnishings, and Star Furniture.

Carla Fried is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



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