“Housing bubble.”

The two words produce a different reaction depending on who you talk to. Some, like Zillow (Z), believe America is on the verge of another bout of unaffordable housing. Others, like Trulia (TRLA), suggest housing prices in the U.S. are undervalued by 5% compared with long-term fundamentals. Investors interested in housing stocks need to know who’s right.

The problem is … that’s difficult to answer.

However, what is clear is that the homebuilding boom is petering out. According to Morningstar, residential construction stocks are down 6% over the past year through April 22 compared to a gain of 21% for the S&P 500. And while I personally see some opportunities in homebuilding stocks, the smart play might be to invest in housing stocks that don’t actually build homes, but instead supply products that go in them.

Housing Stocks — Large Cap

Whirlpool (WHR) recently announced that it was boosting its quarterly dividend my 20% and repurchasing an additional $500 million of WHR stock. Despite losing 20% of its value in the first 22 days of trading in 2014, Whirlpool is on a roll. Since it’s Feb. 3 low of $124.39, WHR stock has bounced back nicely up 25% since and is closing in on its all-time high of $160.01.

The company is so excited about its future that it’s investing $40 million to nearly double the size of its Greenville, Ohio small appliance manufacturing operations. The move will add approximately 400 new jobs by 2018, bringing the total workforce to 1,400. Whirlpool makes its extremely popular stand mixer — a product my wife can’t live without — in the Ohio plant, doubling production over the past five years.

Employees now pump out 16,000 units per day, making the Greenville location a very important cog in Whirlpool’s wheel. Most importantly it’s another sign the company is serious about U.S. manufacturing. Approximately 80% of the products it sells in America are made in America. Innovation is what made the U.S. great; I want to own stocks that believe in American ingenuity.

Whether the housing boom is done is immaterial in my mind. Housing stocks like WHR have figured out how to make money in good times and bad. WHR stock is a must in any buy-and-hold portfolio.

Housing Stocks — Mid Cap

Several analysts upgraded A.O. Smith (AOS) this week amidst its encouraging growth outlook. The manufacturer of residential and commercial water heaters delivered first-quarter earnings results that were ahead of consensus estimates. Its adjusted earnings per share in Q1 was 54 cents, one cent ahead of the analyst estimate and 11% higher than last year. In terms of revenues, it delivered an 8% increase year-over-year to $552 million.

While this might appear mediocre, you’ll want to consider the context in which it delivered these results. Its North American operations, which are very mature, saw sales increase by just 2.6% while generating adjusted segment operating profits that were basically flat year-over-year at $59.1 million. That’s about what you’d expect from a business that has been around for 140 years.

The real growth came from the rest of the world, where revenues increased 25% to $173 million. More importantly, its business outside North America delivered adjusted segment operating profit growth of 38%, resulting in $25.1 million in profits. Almost all of the revenue growth outside North America is from China where over the last 20 years it has been slowly building the infrastructure necessary to compete in the world’s most populous country.

CEO Ajita Rajendra said this about its results: “Our international business, especially in China, has continued to grow as a result of consumer demand for products with more robust features and benefits. Our investment in product development continues to play a key role in our success in China.”

With China doing so well combined with a very stable business on this side of the Atlantic, I’m confident that AOS stock will bounce back from the early hole it’s dug itself in 2014 — down 13% YTD through April 22 — delivering double-digit returns by the end of the year. Whether you’re considering housing stocks or mid-cap stocks for that matter, AO Smith should be on your list.

Housing Stocks — Small Cap

Israel is probably the last place you’d expect to find one of the best housing stocks to invest in, but that’s exactly the case with Caesarstone (CSTE), a global market leader in the high growth engineered quartz surfaces market. CSTE went public at $11 in March 2012, well below its expected range of $14 to $16. As a result, its stock barely budged from its initial pricing until early 2013.

But ever since then, it has been a house on fire gaining 261% through April 22. So what’s the big deal?

Last year it signed an exclusive supply agreement with Ikea’s U.S. division, which has 38 stores in America, to provide the home furnishings superstore with its quartz countertops. The new business is expected to deliver significant revenue in the US, which already accounts for 35% of its overall sales. To meet the ramped up demand it’s opening a $100 million plant in the first half of 2015 in the state of Georgia. There will be two production lines capable of generating $180 million in annual revenue. With $357 million in annual worldwide revenue in 2013, the additional production should continue to push CSTE stock higher.

Housing Stocks — Micro Cap

When it comes to picking housing stocks, this is one I’m sure most people wouldn’t have considered — but it makes sense given how important fitness is in our daily lives. Nautilus (NLS) has been helping people get fit in their homes since 1986. Starting with one product sold on late night TV, it’s had its ups and downs over the years including a very unsuccessful foray into commercial sales that nearly put NLS stock in the scrap heap on a permanent basis.

Several false starts later, it hired Bruce Cazenave to turn the company around. That was in May 2011. Three years later, it’s firing on all cylinders. Its Q4 earnings report in February was a thing of beauty, with revenues and operating profits increasing 19% and 32% respectively. Most of the growth comes from its wholesale operation, which now accounts for 35% of its revenue and almost 50% of its operating profit.

At the beginning of 2014, NLS introduced the Bowflex MAX Trainer, a product that even condo dwellers can use to keep in shape. Retailing between $1,000-$1,500, it’s a small price to pay for convenient exercise. Given the 2013 results, NLS is a $20 stock in the making.

As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.