A steadily recuperating housing market has lifted many stocks over the past year, from homebuilders to home improvement centers. Less than two weeks ago, an additional boost showed up in the form of superstorm Sandy, as damage assessments pile up and rebuilding and reconstruction begins.
Who are these companies that will get a huge assist from the aftermath of Sandy? I've done some nosing around, and I think that these three will see some real increases to the bottom line as homeowners and businesses repair Sandy's damage, even as the housing recovery continues to pick up steam.
Weyerhaeser (NYSE:WY): When it comes to building construction, you can't get much more basic than the need for lumber. One of the largest timber REITs in the U.S., Weyerhaeser manages 22 million acres of forest land. Not surprisingly, lumber stocks rose immediately after Sandy, as damage estimates started to roll in. This is in addition to the increases seen over the past year because of increased housing starts, and lumber is the biggest gainer so far over other building materials and commodities, according to the Wall Street Journal.
Investors have been very happy with Weyerhauser. Since the last time I took a look, the stock has risen nearly 67% year over year, compared with a 40% rise during the same time span at the end of August. Another thing that should make them smile: The company just announced a 13% dividend increase, from $0.15 to $0.17 per share.
Lumber Liquidators (NYSE:LL) has been getting some good press lately and has been named by analysts at Moody's as one of the home improvement suppliers, along with Home Depot (NYSE:HD) and Lowe's (NYSE:LOW), that will benefit from the rebuilding post-Sandy. As fellow Fool Rick Munarriz points out, Lumber Liquidators doesn't grab headlines like the other two home improvement giants, but it is poised to really take off with the housing boom, given its focus on lumber products. This same focus will aid the company when it comes to storm-damage reconstruction as well, I believe.
Apparently, investors feel the same. The stock has soared over 220% over the past year, so, despite being unglamorous, the company is definitely holding investors' attention.
Right up there with lumber is another huge construction commodity: drywall. USG Corp.'s (NYSE:USG) share price has gained almost as much as Lumber Liquidators' over the past year, as improved housing numbers have increased demand for its core product. Despite a miss on earnings, the company reported a $29 million operating profit in Q3, compared with the year-ago loss of $79 million, and plans to institute price hikes early in 2013.
One Fool's take
These three companies may not be in the limelight very often, but the savvy investors that have been bidding up share prices know that these stocks have some real tailwinds behind them. Between storm damage repair and a budding housing recovery, I see companies that supply the basics of the building trade as being the best positioned to take advantage of these markets. Obviously, a whole lot of investors agree -- how about you?
Fool contributor Amanda Alix has no positions in the stocks mentioned above. The Motley Fool owns shares of Lumber Liquidators and Weyerhaeuser. Motley Fool newsletter services recommend The Home Depot, Lumber Liquidators, and Lowe's. Try any of our Foolish newsletter services free for 30 days.