Bed Bath & Beyond Inc. (BBBY), The Home Depot, Inc. (HD): Retailers Ride Housing to Bigger Profits

Retailers aren’t tied to new home sales or sales trends. Bed Bath & Beyond Inc. (NASDAQ:BBBY) customers are not just homeowners, but renters, too. New apartment leases are a boon for the business, just as a new home sale. The same is true of The Home Depot, Inc. (NYSE:HD), which can ride of the wave of new apartment construction as Americans begin to form new households on the back of economic recovery. Apartment building is a perpetual bright spot in the real estate industry.

These two retailers are a diversified bet on an improving economy and household formation. Bed Bath & Beyond Inc. (NASDAQ:BBBY) trades at just fourteen times forward earnings expectations for 2013. Excluding cash on the balance sheet, the company trades for a P/E multiple of 13.

The Home Depot, Inc. (NYSE:HD) is pricier at 18 times earnings due to its levered balance sheet. However, the company continues to post record earnings, smashing through analyst expectations after it grew bottom line net income by 17% in the first quarter of 2013.

A bet on either of these names will position investors to profit from economic growth. New jobs beget home sales and new households, which lead to bigger bottom line income. When it comes to housing, your best bet may be on these two mature retail powerhouses trading at multiples near the broad stock market.

The article Retailers Ride Housing to Bigger Profits originally appeared on Fool.com and is written by Jordan Wathen.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends Bed Bath & Beyond and Home Depot. Jordan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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