New homes sales are expected to eclipse 1 million in 2013, that’s a 25% increase from 2012 for you home-gamers out there. You can play games with restaurant and retails stocks, trying to time the superfluities of the often fickle American housewife. But if you’re a man, the only way to play the US economy is housing.
It was the root cause of all of the pain and suffering and will be its savior. The Fed is intent on inflating home prices. Nationally, home values surged by 5% in 2012. I am expected more of the same, AND MORE.
I’ve talked about this thesis trade for years–but it’s coming down the home stretch now. The profits are about to get serious, moving out from “dead cat bounce” to boom.
Prices for materials are soaring and the price increases will go straight to the bottom line, pushing growth rates way up, making an argument for “multiple expansion.”
I bought FBHS today, a major play on kitchen cabinets and Moen brand plumbing materials. Another kitchen cabinet play is MAS.
If you’re into wallboard, look no further than USG. Price increases were implemented on 1/1/12. If they stick, the stock is going “full wallboard” to the upside. It’s worth noting, Pershing Square is the largest shareholder of FBHS and Berkshire Hathaway own 15% of USG.
The pure plays are the builders. I prefer BZH, PHM, SPF and HOV.
Other material plays that will go higher in a housing boom are FAST, VMC, EXP, CX, TXI, LPX, GVA.
Roofing: BECN, OC
Paint: VAL, SHW
Furnishing: ETH, PIR, BBBY, WSM
HVAC: GNRC, LXU
Doors: GFF
Carpets: MHK
Mortgage software: ELLI
Contractor Review Site: ANGI
Landscaping: POOL
Faux Wood Decks: TREX
Real Estate Sites: Z,TRLA
Appliances: WHR, SWK
NOTE: I took profits in SNE.
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