1 Stock to Play America's Housing Boom

One of the biggest trends in 2012 was the long-awaited recovery in the housing market. And already in 2013, the housing rebound is shaping up to be one of the biggest trends yet again.

There are a number of housing-related stocks that have been performing quite well as a result. The big home-improvement retailers, for example, are delivering outstanding returns so far in 2013. Home Depot (NYSE: HD  ) and Lowes (NYSE: LOW  ) are up 26% and 19%, respectively. Hardwood-flooring retailer Lumber Liquidators (NYSE: LL  ) , which was one of the top-performing stocks of 2012, has seen its shares rise by almost 400% since the beginning of that year. Clearly, some investors are benefiting tremendously from the housing recovery that appears to be gaining momentum.

We feel this long overdue recovery will continue in the coming years, and have identified an underfollowed (and underappreciated) company that should outperform in the current environment. The company is Tile Shop Holdings (NASDAQ: TTS  ) , a fast-growing home-improvement retailer focused on selling tile and tiling accessories. We never thought we could get so excited about tiles.

David Meier has been following this company very closely for a while now, and we thought it might be helpful to share some of his research. To learn more about Tile Shop, just click the arrows within the embedded slideshow below. Alternatively, you can view each of the slides by clicking the link below the slideshow.

1 Stock to Play America's Housing Boom from The Motley Fool.

To learn about another stock that is poised to benefit from current trends, check out our latest free report: The Motley Fool’s Top Stock for 2013. The company detailed in the report was handpicked by The Motley Fool’s Chief Investment Officer, who predicts it’ll have an excellent year in 2013. You can access your free report by clicking here.



Read/Post Comments (20) | Recommend This Article (65)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 05, 2013, at 4:52 PM, MichaelHamilton wrote:

    Interesting. Still it looks frothy at the current price. Also I am not convinced on how sustainable the housing recovery will be.

  • Report this Comment On June 05, 2013, at 5:14 PM, airpurifier wrote:

    Last year you did mention Lumber Liquidators. I had my doubts . You snooze, you loose! Maybe this time I should li$ten?

  • Report this Comment On June 05, 2013, at 5:19 PM, jetmacjoe wrote:

    Housing Boom?? What??I'm seeing some houses sell 20-30% below what the market price brought 8-10 years ago. But as Warren Buffett says,"one thing is for sure,the housing market will eventually come back". We just don't know when. When it does the clock will strike 12 again.

  • Report this Comment On June 05, 2013, at 5:55 PM, xetn wrote:

    I suppose you could short BAC.

  • Report this Comment On June 06, 2013, at 2:38 AM, Zammic1234 wrote:

    TTS, is this a buy now even at almost it's high for the year.

  • Report this Comment On June 06, 2013, at 11:38 AM, hbofbyu wrote:

    Time to short LL, HD, and LOW.

  • Report this Comment On June 06, 2013, at 12:04 PM, hbofbyu wrote:

    We're now seeing unsustainably high rates of home appreciation, In Phoenix, in San Francisco, in Orange County and San Jose it is 20-plus percent year-over-year appreciation. Far too high. The housing market has come back too fast. I don't see these stocks as a good buy right now.

  • Report this Comment On June 06, 2013, at 12:10 PM, Johny205 wrote:

    I was a tile contractor for many years and have a contractors account set up with the Tile Shop. There is a lot of profit in the tile industry. There is about 300% mark up from importing crates from Europe. By having a contractors account at a tile distributor, they typically take 25 to 30% off retail price, and they are still doubling their money from what they paid for the materials. The tile shop sells a lot of it's products for retail price to homeowners. They have a good return policy and have how to workshops for homeowners to learn how to do tiling. The staff is well trained and they also have great displays in their showrooms--which are huge.

  • Report this Comment On June 06, 2013, at 12:58 PM, Mega wrote:

    Looks like a terrible idea.

    Notice how the slide show doesn't mention valuation.

  • Report this Comment On June 06, 2013, at 1:45 PM, TMFPennyWise wrote:

    Nice slide show.

    The Tile Shop stores are beautiful and carry very nice product lines. (Much better than Lowes and HD.) I have been very pleased with my experiences with them.

    And the story for TTS stock is compelling, given the projected new store growth trajectory. I know there are some indicators that the housing recovery will be rocky, but for longtime homeowners like me who have been biding their time fhru the last six or eight years--our kitchens and bathrooms are getting pretty tacky and definitely could use a facelift now that the housing market is showing a few signs of resurrecting itself.

    Some re-tiling is a nice way to freshen up the old digs for a possible real estate listing, so I see lots of potential remodel tile buyers as well as opportunity for new build installations on the The Tile Shop radar.

    Jay

    Bought both the tile and the stock.

  • Report this Comment On June 06, 2013, at 3:41 PM, susan400 wrote:

    This is another typical TMF gone wrong. At its start TMF was going to be different than Wall Street, and here we are

    housing related stks are up for ys,, NOW buy one ?

    Why because housing is in the NEWS. eye catchy.

    like teh lotto, weak minds are harmed .

  • Report this Comment On June 07, 2013, at 2:53 AM, midnightmoney wrote:

    Susan, the Fool has been talking about the housing recovery for years and recommended lumber liquidators well before its run-up. I think they're just sharing their ideas--and they're doing it for free. I'll take another helping, myself.

  • Report this Comment On June 07, 2013, at 9:04 AM, TMFPennyWise wrote:

    Gee, Susan, I guess you don't read much of TMF--in the last couple of years they have put me on to some really nice stocks to take advantage of the housing recovery.

    II think TTS has lots of room to run still and is a good rec for the multitude who are holding cash out of the market but are looking to invest now.

    A closer look at the whole range of articles and info available on the Fool just might temper your apparent sour point of view and make you a little more money, too.

    Just my 2 cents. Jay

  • Report this Comment On June 07, 2013, at 10:03 AM, cameron1994 wrote:

    Good presentation, would have been nice to see a few more metrics and maybe some reasons to be cautious of buying the stock.

  • Report this Comment On June 07, 2013, at 3:53 PM, cmanner wrote:

    As a retired Tile contractor (MrTile.com), I can assure you, in my career (past 35 years in the tile business), NOT ONE TILE COMPANY has made a sustainable profit and ALL US based Tile companies are out of business, or failing.

    Even Shaw learned that ceramic tile is a tough business. It's the weight, stupid!!!

  • Report this Comment On June 07, 2013, at 5:47 PM, fwe43 wrote:

    The price of housing in 2007/08 was much much higher than it should have ever been. So on the one hand I don't think we should use that as a judgement for whether housing is booming again. It doesn't even need to reach those levels for an indication of a strong market.

    On the other hand, in some areas housing is already back to those levels. And housing has had a tremendous run especially fueled by low interest rate mortgages. For those who bought LL 2 years ago it was wise. To buy into the housing boom right now you are for sure playing with fire. I'm not a bear that expects a crash. But the opportune moment to buy stocks (housing or any kind) has passed. Ti,e to be much more careful.

  • Report this Comment On June 07, 2013, at 7:03 PM, Questionable2 wrote:

    The P/E Ratio is a -10.31

    according to AOL Finance!!!

    Who would invest in a company with a negative P/E?

    As to the housing market it is a very local market as to price increases. I have a house in an estate and it tax value dropped another $10,000 this year so it is off 20% from the high before the crash.The funny thing is from this point it has to rise 25% to get back to it value before the crash. Ideal rental home for a photographer and nature lover near Richmond, VA

  • Report this Comment On June 07, 2013, at 7:45 PM, Questionable2 wrote:

    It get worse. The company is selling Stocker Holders!!!!!

    Quote "Tile Shop Announces Pricing of Public Offering of Common Stock by Selling Stockholders---by Business Wirevia The Motley Fool Jun 4th 2013 7:34PMs" Which Stockholders are they selling and do you have to feed them if you buy them?

    This article say "The shares of common stock will be sold at a public offering price of $24.25 per share ( until June 10th) but shares are already above this price today (Friday June 7, 2013 7:41PM)

    I had thought of investing in a round lot but now after doing some research I am going to check the calendar to make sure it is not April 1 Fools Day

  • Report this Comment On June 07, 2013, at 7:47 PM, Questionable2 wrote:

    Should read: It gets worse. : No edit button like on local photo bb or Adobe forums.

  • Report this Comment On June 21, 2013, at 1:04 AM, lrecap wrote:

    What I have heard, in OC, CA as well as others key housing areas, (significant?) part of the upward drive on home prices are from external (non-US) money sources (China, etc). I know that in my area, "cash" offers are being made (including my own house). But is this really sustainable?

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