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Why ANGI Homeservices Stock Popped Today

By Jeremy Bowman – Jul 6, 2020 at 5:48PM

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Shares of the home-improvement specialist gained on a better-than-expected services report.

What happened

Shares of ANGI Homeservices (ANGI) were moving higher again today as investors reacted to a report showing a strong rebound in the services sector in June. That news seems to confirm that spending in categories like home improvement is recovering quickly following the shutdowns this spring. 

As a result, ANGI Homeservices closed up 11.3%, which followed strong gains last week as well.

Two people looking at a floor plan on a phone.

Image source: Getty Images.

So what

The Institute for Supply Management's reading for services in June came in at 57.1, showing a robust expansion from the prior month, following a two-month contraction, and easily beat expectations.

The business activity index was 66 and new orders came in at 61, both positive signs for ANGI, which owns HomeAdvisor, Angie's List, and Handy, and connects homeowners with service providers for everything from cleaning to landscaping to plumbing. The stock has emerged as a winner during the recovery period as home-improvement spending has increased. Americans are spending more time at home than usual, and outlets like travel, entertainment, and restaurants are largely unavailable to take discretionary income , leaving more money for home improvement.

Last week, the company released data that showed solid demand for improvement services, as 92% of respondents who said they usually hire a home-improvement pro were planning to do so this year, and 38% said they plan to use some of their federal stimulus money for home-improvement projects.

Now what

ANGI shares have rallied to a 52-week high in recent weeks, but about 60% of the float is sold short, indicating the market has a low opinion of the stock. A short squeeze may have also helped lift shares as short sellers may have rushed in to cover their losing bets. However, a number of signs are pointing to demand coming back to the home-services marketplace. CEO Brandon Ridenour said in early May that the company was beginning to see a "V-shaped recovery." 

The recent gains, in other words, could very well be deserved.

Jeremy Bowman owns shares of Angie's List, Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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