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Why Wayfair, Michaels, and ANGI Homeservices Were Popping Today

By Jeremy Bowman – Updated Oct 1, 2020 at 3:59PM

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Three consumer-facing stocks jumped on a strong earnings report from a peer and hopes for a stimulus deal.

What happened

Shares of Wayfair (W -0.15%)Michaels (MIK), and ANGI Homeservices (ANGI -8.22%) were all moving higher today, though there was no specific news out on any of these companies. Instead, a combination of a strong earnings report from Bed Bath and Beyond and hopes that another stimulus package would be passed seemed to lift the trio of stocks.

Bed Bath and Beyond, one of the biggest brick-and-mortar home goods retailers, reported positive comparable sales growth for the first time since 2016 and delivered a surprise profit as online sales jumped 89%. The news signaled that demand for home goods remained strong, boosting Wayfair, a direct competitor; ANGI Homeservices, a home-improvement online marketplace; and Michaels, another undervalued brick-and-mortar retailer.

As of 1:53 p.m., all three of these stocks were around up double digits. Wayfair had gained 10.8%, ANGI Homeservices was up 11.2%, and Michaels had gained 9.8%.

A stock chart moving higher.

Image source: Getty Images.

So what

In addition to the bullish report from Bed Bath & Beyond, investors in these three stocks were also encouraged by news that Congress seemed to be getting closer to another stimulus deal, news that has pushed the markets higher this week and today.

Treasury Secretary Steve Mnuchin said that both sides had agreed to include direct payments of $1,200 in the next package, an encouraging sign for all three of these companies as they all depend on consumer discretionary spending. Additionally, these companies all saw sales recover rapidly after the April round of direct payments went out and all three stocks surged off of their March lows, proving their mettle as "stay-at-home" stocks. House Speaker Nancy Pelosi said this afternoon after a conversation with Mnuchin that the two sides were still at odds, which seemed to cool off stocks in afternoon trading. Pelosi plans for the House to take a vote on a $2.2 trillion bill today, though Republicans want a smaller bill.

Americans have upped their spending on home improvement and home goods during the crisis as they've been forced to spend more time at home than normal and have limited options for spending money with restrictions on things like travel and entertainment. That dynamic has buoyed stocks like Wayfair and ANGI Homeservices. Wayfair saw its second-quarter profit jump 84% to $4.3 billion and it reported its first ever quarterly profit. ANGI Homeservices hasn't experienced a strong recovery in its financials as its base of home-service providers has been overwhelmed by demand; marketplace service requests have jumped by about 30% from May to August, though revenue has only grown by half that. Still, that demand growth is a bullish sign for the company.

Finally, Michaels shares had fallen as low as $1 during the sell-off in March, but are now trading at more than $10 a share, showing that business recovered sharply from expectations as it reported 12% comparable sales growth in its most recent quarter. As an arts-and-crafts supplies retailer, Michaels has benefited from Americans spending extra time at home.

Now what

Investors in all three of these stocks should keep their eyes on stimulus negotiations over the coming days as both sides appear to be getting closer to a deal, which many Americans are hoping for before Election Day. As companies that are dependent on consumer spending and that offer products and services that have been popular during the pandemic, the group of stocks could surge again if another stimulus bill successfully makes its way through Congress.

Jeremy Bowman owns shares of ANGI Homeservices Inc. The Motley Fool owns shares of and recommends Wayfair. The Motley Fool recommends The Michaels Companies. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Michaels Companies Stock Quote
The Michaels Companies
MIK
Wayfair Stock Quote
Wayfair
W
$32.22 (-0.15%) $0.05
Angi Inc. Stock Quote
Angi Inc.
ANGI
$2.01 (-8.22%) $0.18
Bed Bath & Beyond Stock Quote
Bed Bath & Beyond
BBBY
$3.27 (7.57%) $0.23

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