Home Improvement Market Floats These Stocks

It's officially spring, the time of year that homeowners typically start thinking about sprucing up their houses with a fresh coat of paint, new decks or patios, or even new kitchen cabinets. As the economy has begun its slow ascent from the doldrums and unemployment eases, the home improvement industry has been enjoying a resurgence. Even with home equity loans less available than they were a few years ago and the fact that many homeowners still owe more on their homes than they are worth, people are improving, rather than moving.

This is good news for the home improvement industry, and many stocks are showing the gains from this trend. Sherwin-Williams (NYSE: SHW  ) , that venerable old paint manufacturer, has been on a real tear lately, with its stock moving up 64% since last fall and having turned in excellent financial reports since last fall, when it landed a contract with Choice Hotels. Equally active has been competitor Valspar (NYSE: VAL  ) , whose stock has risen about 26% in just the past three months, despite a slight disappointment in first-quarter revenue numbers. Investors obviously forgave that slip when the company announced that not only would it continue to recoup increased costs by raising prices, but it raised its 2012 forecast, as well.

Trex (NYSE: TREX  ) , a company well-known for manufacturing wood and plastic composite decking material, has seen its star rise the last three months, too, as has Masco (NYSE: MAS  ) , a supplier of faucets, windows, and cabinets. Trex recently turned in slightly disappointing numbers, but investors apparently have faith going into deck-building season and have raised the stock price close to its 52-week high. Masco had been hurt badly by the housing downturn, as well as the decrease in home improvement projects by homeowners reining in their spending. The company went on a cost-cutting spree, and those efforts, combined with the mending economy, have given the company and its stock a lift.

Is the upsurge for real?
The housing market is definitely improving, albeit in fits and starts. Each time housing hits a snag, these stocks will probably suffer, but don't let that scare you away from taking a good look at all four of these companies. The home improvement sector is expanding, seeing a rise from negative numbers in 2010 to 2.3% that is predicted to swell to 5% this year. All four of these companies will profit by both the new home and home improvement sectors, and if one dips, the other will surely buoy them.

As people become employed again or stop worrying so much about losing the job they have, they will continue to relax the purse strings in order to catch up on those repairs and improvements they were unable to do for the past three years. Just remember not to fear the dips -- they may represent the best time to step in and make some very sweet deals. If the past few months are any indication, these stocks are headed for long-term improvements.

Consumer spending is an important part of a healthy economy, and things are looking healthier all the time. Who will be the winners of this robust new economy, and how can you get in on the action? Interested? We'll share -- for free. Just click here and be amazed!

Fool contributor Amanda Alix owns no shares in the companies mentioned above. Motley Fool newsletter services have recommended buying shares of Sherwin-Williams. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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