Resurgent Housing Sector Favors Masco Corporation (MAS)

Page 1 of 2

Recent rosy figures from the US housing sector bode well for Masco Corporation (NYSE:MAS), which is engaged in the manufacturing, distribution, and installation of home improvement and building products. Its product line, which among other items includes windows, architectural coatings, faucets, and cabinets, is distributed through multiple wholesale and retail channels. Masco also sells directly to home developers.

Masco Corporation (NYSE:MAS)One of Masco’s major retail conduits is The Home Depot, Inc. (NYSE:HD) , which has 2,252 locations across the U.S., including Puerto Rico and the American territories in Virgin Islands and Guam. Home Depot’s clientèle is primarily comprised of do-it-yourself and do-it-for me customers, as well as professional builders. This spring, the home improvement retail chain is increasing its seasonal hiring to 80,000 workers; it had some 70,000 seasonal hires last year. Home Depot is also planning 3,500 additional stores in New Jersey and New York where repairs on the damage of Hurricane Sandy are continuing. The company’s revenues in the previous two quarters are on an uptrend, with a 1.7% gain in the 2012 second quarter and a 4.6% increase in the third quarter to $18.13 billion.

Recently released statistics paint a bullish picture for both Masco and Home Depot.  Data from the US Commerce Dept. shows that housing starts across the country surged by 12.1% in December 2012 to an annual rate of 945,000 units, the fastest pace since June 2008.

Opportunities from New Construction and Renovation

This uptrend in new home construction can be expected to continue this year as market inventories of previously owned homes dropped 8.5% to an 11-year low of 1.82 million units in December, figures from the National Association of Realtors show. Meanwhile, sales of previously owned residences are accelerating, which was registered at a 12.8% clip to 4.38 million units for the month. At this current sales pace, it is estimated that previously available occupied homes are just at a 4.4 months supply, down from the 4.4-month level in November.

This declining pattern was observed for most of 2012 and is likely to continue into 2013. Slow but steady gains in employment, coupled with higher consumer confidence and record-low mortgages, have fueled sustained demand for existing homes and new builds.

A silver lining is likewise provided to Masco and Home Depot in the scenario of institutional investors, such as hedge funds, edging out individual home buyers in home re-sales, particularly on the relatively lower-priced distressed properties foreclosures. These investors have the war chest to pay in cash and can thereby outbid individual home buyers in the home re-sale market. Home improvement manufacturers and suppliers, like Masco and Home Depot, in turn benefit as these investors spend more to renovate their acquisitions as rental properties.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!