Last year, Americans spent lavishly on upgrading their living spaces as the pandemic forced them to stay indoors for months. This had helped Do-It-Yourself (DIY) and home furnishing companies flourish. The trend is expected to continue this year too. A substantial jump in popularity of online platforms along with availability of guides, kits and techniques for DIY projects will boost the global DIY home improvement market.
Tailwinds in 2021
The housing market was a bright spot last year and given the tailwinds, growth will continue in 2021. People continue to shift from high-density urban areas to suburbs as working and learning from home continue. Remodeling or repurposing existing home spaces includes turning unused rooms into home offices and study tables into classrooms.
Among the factors supporting growth, vaccination and employment hold utmost importance. So far, experts believe that by mid-2021, mass vaccinations will be carried out in the United States and this will help the economy fully reopen and restart hiring. A drop in unemployment will provide disposable income, encouraging people to spend more.
Second, even after vaccination, many companies will continue to evaluate how much flexibility they want to provide employees who want to work from home. Employees are also weighing perks of working from home, and why not? After all, logging in remotely can help them stay in less-expensive areas. The National Association of Realtors expects 18% of U.S. workforce tocontinue working from home this year. When it comes to home working spaces, people focus more on lighting and the decor of the walls for capturing the office-like environment and also video conferencing and virtual meetings.
Lastly, low borrowing rates have encouraged Americans to make homes neat or smart in appearance. People now prefer to spend time in gardens and outdoor spaces more than in congested areas. This has sparked a rise in garden transformation projects and Houzz, an online platform for home design and renovation, reported a rise in web searches for DIY firepits, hot tubs and outdoor kitchens last year. These upgrades to houses also increase home value. This home enhancement trend will continue this year, as demand for outdoor kitchens, covered dining and entertainment spaces is rising.
What’s more? Of late, urbanization, rising disposable income in developing countries and changing lifestyles in developed nations are driving factors that help the DIY home improvement retailing market boom. In fact, several parents are now calling it a family activity where the whole family can get engaged in wall painting, letter boards, shoe holders, planters, outdoor furniture projects and much more.
Per a Research Dive report, global DIY home improvement retailing market is expected to see a CAGR of 3.2%, raking in revenues of $784 billion by 2027 versus $611.7 billion in 2019. The North America region owns a significant market share and has generated revenues of $340 billion in 2019 and it is expected to reach up to $423 billion by 2027.
5 Stocks to Watch
Need for larger homes to accommodate office and study space in addition to massive spending in kitchen and bath projects are continuing to boost the housing market this year. This will also help the DIY home improvement space scale up. Hence, we have shortlisted five stocks that investors can keep an eye on.
Ethan Allen Interiors Inc. ETH operates as an interior design company, and manufacturer and retailer of home furnishings. The company’s expected earnings growth rate for the current year is more than 100% compared with the Zacks Retail – Home Furnishings industry’s projected earnings growth of 55.3%.
The Zacks Consensus Estimate for the company’s current-year earnings has been revised 27.4% upward over the past 60 days. Ethan Allenflaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lowe’s Companies, Inc. LOW operates as a home improvement retailer. It offers a line of products for construction, maintenance, repair, remodeling and decorating. The company’s expected earnings growth rate for the current year is 52.3% compared with the Zacks Building Products – Retail industry’s projected earnings growthrate of 11.4%. The Zacks Consensus Estimate for its current-year earnings has moved 2.2% higher over the past 90 days. Lowe’s holds a Zacks Rank #2 (Buy).
The Home Depot, Inc. HD operates as a home improvement retailer. It sells various building materials, home improvement products, lawn and garden products, and décor products. This Zacks Rank #2 company’s expected earnings growth rate for the current year is 14.8% compared with the Zacks Building Products – Retail industry’s projected earnings growth of 11.4%. The Zacks Consensus Estimate for its current-year earnings has risen 2.8% over the past 90 days.
Wayfair Inc. W engages in the e-commerce business, offering furniture, décor, decorative accents, housewares, seasonal décor and other home goods. The company’s expected earnings growth rate for the current quarter is more than 100% compared with the Zacks Internet – Commerce industry’s projected earnings growth of 10.7%. The Zacks Consensus Estimate for its current-year earnings has moved 5.1% up over the past 60 days. Wayfair carries a Zacks Rank #3 (Hold).
The Sherwin-Williams Company SHW develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers. This company that belongs to the Zacks Paints and Related Products industry has an expected earnings growth rate of 10% for the current year. The Zacks Consensus Estimate for its current-year earnings has moved 1.1% up over the past 60 days. Sherwin-Williams carries a Zacks Rank #3.
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