We’re now going into our second winter of the coronavirus pandemic. With vaccines going into arms and a summer reprise, things had been looking up. Investors were even beginning to look beyond vaccine stocks to longer-term healthcare opportunities. Then the omicron variant hit. Companies began to cancel plans to have employees return to the office. Home offices are back in the spotlight and people are looking to make their homes as comfortable as possible for what looks like a long winter. It’s time to look at opportunities among at-home stocks.
I’ve put together a list of companies that are well-positioned to take advantage of what’s coming. You may end up stuck at home more than you’d like this winter, but at least you can count on your portfolio growing in value thanks to at-home stock picks like these:
- DR Horton (NYSE:DHI)
- Ethan Allen Interiors (NYSE:ETD)
- Lennar (NYSE:LEN)
- Skyline Champion (NYSE:SKY)
- Spectrum Brands (NYSE:SPB)
- Tempur Sealy International (NYSE:TPX)
- Toll Brothers (NYSE:TOL)
Adding to their appeal, each of the stocks on this list also scores at least a “B” Total Grade rating in Portfolio Grader.
Stay-At-Home Stocks: D.R. Horton (DHI)
With many people working from home and their kids facing hybrid or remote learning, space became an issue for many families. With stimulus money in their pockets and a desire to find a house with more space to spread out and set up home offices, Americans kicked off a red-hot real estate market in 2020. Realtors did a booming business, but so did new home builders. D.R. Horton is America’s largest homebuilder, and the company had a killer year, with net sales orders up 39% to 78,458 homes.
The housing boom has continued through 2021. With the new stage of the pandemic sending many workers back to home offices and infections increasing at an exponential rate, expect demand for new houses with more space to spread out to increase.
DHI stock has delivered a return of over 225% since the start of the pandemic. The long-term growth picture for this at-home stock looks very good at this point.
At the time of publication, DHI stock scored a “B” rating in Portfolio Grader.
Ethan Allen (ETD)
Ethan Allen suffered early in the pandemic, with lockdowns shuttering its retail stores. At the height of the lockdowns, it had to furlough 70% of its employees. However, the upscale furniture maker was well positioned for what came next: a wave of spending on home furnishings and home office furniture.
In 2021, when supply chain challenges impacted many of its competitors, Ethan Allen has had the advantage of 75% of its products being manufactured in North America. With omicron sending workers back home, expect the investment in home office furnishings to ramp up again. There’s a good chance we’ll see a repeat of last winter, when home-bound consumers spent money on redecorating. Ethan Allen will be set to meet that demand instead of hoping for container ships full of office desks to finally be unloaded.
Ethan Allen shares have been hovering around the $25 level since the summer, well off a near 5-year high close of $31.99 in May. That gives ETD stock a considerable runway for growth.
The current Portfolio Grader rating for ETD stock is “B.”
Stay-At-Home Stocks: Lennar (LEN)
Lennar is one of the country’s largest homebuilders, with a focus on luxury homes. The company is benefiting from the same hot real estate market that makes D.R. Horton a top pick among at-home stocks. In addition, Lennar also earns revenue from real estate sales-related services like title insurance.
On Dec. 15, Lennar reported its fiscal full-year 2021 results and they were impressive. The company set all-time records for net earnings, revenue, new orders, deliveries and net margin in 2021. Revenue was up 21% for the year to $27.1 billion on sales of 59,825 new homes. This allowed Lennar to retire $1.5 billion in senior notes that were coming due in 2022, as well as repurchase $1.37 billion worth of LEN stock.
The company finished Q4 with a backlog of 23,771 homes worth $11.4 billion. In other words, even if the real estate market cooled, Lennar would still be busy. But that’s not likely to happen. If anything, omicron is likely to drive people back into the hunt for larger homes. That means the 43% gain for LEN stock in 2021 is likely to continue with ongoing growth in 2022.
LEN stock currently scores an “A” in Portfolio Grader.
Skyline Champion (SKY)
Skyline Champion is another of North America’s largest homebuilders. Sensing a trend here? This one has a twist, though. Skyline Champion builds modular, pre-fabricated and park-model RV homes. These are in high demand as more affordable housing options for renters who want to buy a home but would otherwise be priced out of the market.
How big is Skyline Champion? It has been in operation for 60 years, operates 40 manufacturing facilities and has sold over 3 million homes.
SKY stock has been going nowhere but up since the pandemic began. So far in 2021 investors have enjoyed a 133% return. As the pandemic-fueled desire to move out of apartments into roomier homes continues to collide with the reality of sky-high real estate prices, look for Skyline Champion to continue to deliver solid gains for investors.
Portfolio Grader ratings don’t get any better than the “A” scored by SKY stock.
Stay-At-Home Stocks: Spectrum Brands (SPB)
The idea surrounding at-home stocks set to deliver gains as remote work lingers on isn’t just about the rush to buy new homes. There have been other big consumer trends during the pandemic, including home improvement, pet adoption, gardening and self-care. Spectrum Brands just happens to have all those areas covered off.
Among its portfolio of companies are popular pet supply brands like Nature’s Miracle, leading hardware brands including Kwikset and Weiser, Spectracide and other well-known gardening brands. It also includes popular names in home and personal care such as Black + Decker, Remington and Juiceman.
After posting growth of 197% from the stock market crash to the end of 2020, SPB stock is up 22% in 2021. With a winter surge of the omicron variant kicking off another remote work season, expect Spectrum to benefit from consumer spending.
At the time this list of at-home stocks was published, SPB stock was rated “B” in Portfolio Grader.
Tempur Sealy (TPX)
When people are working from home and staying home more to avoid risk of exposure to Covid-19, behavior changes. For example, they spend more money on improving their surroundings. And the bed seems to be an area of focus. A 2021 industry study uncovered some interesting facts in this area. Among them, consumers under a stay-home order were were more likely to buy a mattress. They were also more likely to upgrade their bed to a larger size. The study also found that good sleep and a good mattress were more important as people became concerned for their health.
That focus on improving sleep explains why mattress and bedding maker Tempur Sealy reported record-setting revenue in 2020. TPX stock rose sharply in 2020. In 2021, it has posted growth of 70% so far. With omicron poised to turn this winter into a repeat of last year’s this is one of the at-home stocks that stands to benefit again.
You can sleep easy with the Portfolio Grader “B” rating for TPX stock.
Stay-At-Home Stocks: Toll Brothers (TOL)
Finally, we have yet another homebuilder. Luxury home construction company Toll Brothers is currently ranked as the fifth largest in the country. Unlike other homebuilders on this list, Toll Brothers had a tough 2020. Home sale revenue of $6.94 billion was down 2% from 2019 levels. However, business was hitting a torrid pace by the end of 2020 and the company ended the year with its highest year-end backlog of homes in 15 years.
In 2021, that momentum continued. Full-year homes sale revenue hit $8.43 billion, up 22% year-over-year.
The company’s CEO is bullish on the trend continuing: “Demand remains very strong. The housing market continues to benefit from solid fundamentals, including favorable demographics, pent up demand from over a decade of underproduction of new homes, low mortgage rates, a tight resale market, and permanent changes to the way Americans view life, work and home.”
In 2020 — despite an impressive recovery from the March stock market crash — TOL shares barely recovered to pre-pandemic levels. However, in 2021 TOL stock has been in growth mode, notching a 57% gain so far in the year.
TOL stock currently earns a “B” rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in SKY, TOL, and TPX. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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