Manufacturing what its management team calls “affordable innovation,” toolmaker ToughBuilt Industries (NASDAQ:TBLT) disclosed today that second-quarter sales at Amazon (NASDAQ:AMZN) jumped 20% from the year-ago level. In response, TBLT stock spiked 35% before settling around 25% up during late-morning trading.
Nominally, ToughBuilt rang up $3.56 million via the iconic online marketplace. Moreover, the company noted that sales for the first half of 2022 came in at approximately $7.01 million, a very strong result when stacked against the year-ago comparison of $5.31 million.
In a press release, ToughBuilt CEO Michael Panosian commented, “The Company’s growth remains significant despite unfavorable market conditions. Our sales through Amazon continue to be a driving force for ToughBuilt’s overall revenue growth. We look forward to expanding upon our product portfolio and revenue success.”
Quite likely, both investors and analysts covering the trades industry will take great encouragement from this recent disclosure. To be completely transparent, TBLT stock has so far disappointed stakeholders, hemorrhaging approximately 96% on a year-to-date basis – even when accounting for today’s pop higher.
However, speculators may be eyeballing a potential reversal in the broader blue-collar sector, which may carry significant implications for the rest of the economy.
TBLT Stock and the Possible Industry Pivot
Regarding the tool manufacturing sector, what immediately comes to mind is the housing market outlook. Throughout most of the new normal, the remarkable boon in real estate demand represented the unique contradiction of Covid-19: Dire news for American society opened doors of opportunity for certain well-heeled households.
Of course, in recent months, such radical demand for housing acquisitions has decelerated, leading to concerns that a possible real estate bubble could pop. However, with ToughBuilt improving its sales significantly on a percentage basis via Amazon, the implication isn’t just a net positive for TBLT stock. It’s also an encouraging development for the construction segment as a whole, with new housing construction representing a significant market share.
Further, the surge in TBLT stock suggests that reports of e-commerce’s death may be greatly exaggerated. According to data from the U.S. Census Bureau, e-commerce as a percentage of total retail sales slipped from 16.4% in Q2 2020 to 14.3% in Q1 2022. Therefore, ToughBuilt’s Amazon sales may help dispel notions that consumers are pivoting to brick-and-mortar stores to avoid shipping fees associated with online transactions.
In other words, ToughBuilt’s consumers may be more inflation-immune than analysts previously thought.
Investors Must Proceed with Caution
Although it’s tempting to jump onboard TBLT stock ahead of a possible positive transition in the economy, it’s important to keep matters in perspective. As of now, ToughBuilt is not a major player in the tool-manufacturing industry, commanding a market capitalization of only $5.39 million.
Further, to get a better read on the broader construction segment, investors should consult the pricing dynamics of blue-chip powerhouses like Stanley Black & Decker (NYSE:SWK) and Makita (OTCMKTS:MKTAY). On a YTD basis, these shares are down 42% and 41%, respectively. Neither of them increased higher on Monday morning, suggesting that enthusiasm for TBLT stock may be a one-off event.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
