Is Best Buy Co., Inc. (BBY) a Housing Play?

Bed Bath & Beyond occupies a similar niche to Williams-Sonoma, but is generally targeted to consumers with lesser incomes. Like Williams Sonoma, Bed Bath & Beyond sells kitchenware, furniture rugs and other housing-related items.

In 2012, the company acquired Cost Plus for roughly $500 million. Cost Plus is a competitor to Pier 1 Imports, which is also included in the SPDR Homebuilder. Analysts at Oppenheimer upgraded Bed Bath & Beyond last year on optimism for the housing sector.

As a secondary play on a housing rebound, both stocks make sense. Although consumers can shop there any time, sales at both stores should see a lift when the housing sector is performing well.

In particular, new households should generate some of the biggest demand for housing goods, as young adults, having used their parents’ furniture and kitchenware for years, must buy these items to go along with their new living quarters.

Freddie Mac’s chief economist (via RisMedia) believes that a million new households formed in 2013 will help drive housing demand. If true, that should translate into a lot of demand for home goods.

Best Buy as a housing play

So, given that Best Buy Co., Inc. (NYSE:BBY) is seeing increased demand for appliances, and is working to bolster its appliance strategy, the retailer could be seen as a secondary play on the growing housing market. After all, new homes need new appliances.

Granted, investors looking to play housing more directly should probably stick to a homebuilder stock or ETF. But that said, those who believe the company is headed for bankruptcy should consider that Best Buy sells goods other than standard consumer electronics.

The article Is Best Buy a Housing Play? originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

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