The Next Home Depot? 3 Home Improvement Stocks That Investors Shouldn’t Ignore

Muslim Farooque

February 18, 2024 4 min read

Home improvement stocks are incredibly relevant in today’s seller-driven real estate market.

With scarcity in home listings and prices on the rise, homeowners have been tapping into home equity to boost property values through renovations. Moreover, with interest rate cuts on the horizon, the sector could be in for a growth spurt this year, with Home Depot (NYSE:HD) leading the pack. As the top home improvement retailer in the U.S., Home Depot offers a comprehensive suite of products and services for construction, renovation and upkeep. Inspired by Home Depot’s success, other home improvement entities have staked claims in the market, establishing strong footholds.

Moreover, the home improvement industry’s expansion is remarkable, with the global market reaching a valuation of $830 billion and U.S. retail sales hitting $426 billion. This booming growth signals a bright future and underscores the significant investment opportunity within this sector. That being said, let’s dive into three exceptional home improvement stocks poised for promising returns, highlighting their unique offerings and strategic positions.

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Arhaus (ARHS)

A staged room with a blue chair in focus.

Source: Shutterstock

Arhaus (NASDAQ:ARHS), the Ohio-based premium home furnishings brand, has seen its share price climb 11.91% year-to-date and 17.45% in the last month. The brand’s momentum comes with its spring 2024 collection release, featuring new upholstery, accent chairs and updates to favorite collections. Arhaus also introduced a novel bedding collection crafted in Portugal, India and Italy to complement various home styles.

Moreover, Arhaus has inaugurated a 16,000-square-foot storefront in Newport Beach, California. This expansion underscores the brand’s growth strategy and positions California as a key market with the highest number of Arhaus outlets outside its Ohio and Florida strongholds. The move reflects a calculated effort to tap into burgeoning markets.

Financially, Arhaus reported a commendable revenue increase to $326.23 million, up 1.94% year-over-year (YOY), surpassing forecasts by $8.32 million. Additionally its EPS also outperformed estimates by two cents, reaching 14 cents. Hence, with these solid financials, TipRanks analysts have assigned a ‘strong buy’ rating on Arhaus, highlighting a promising 2.36% upside potential.

Lovesac (LOVE)

Lovesac store sign at Florida Mall in Orlando, Florida, USA. Lovesac is an American furniture retailer, specializing in a patented modular furniture system. LOVE stock.

Source: JHVEPhoto / Shutterstock.com

Lovesac (NASDAQ:LOVE), a pioneer in the home furnishings sector, is sculpting a new era of comfort with its innovative sectional offerings. This ingenuity has propelled the company’s share price by 4.55% over the last six months. Adding a dash of snazziness to its strategy, Lovesac’s collaboration with KidSuper for Fall/Winter 2024 fuses vibrant street style with upscale home comforts, marking a significant leap in creative and marketing endeavors.

Financially, Lovesac reported a remarkable 14.3% YOY net sales increase to $154 million, surpassing analyst predictions. The financial dance gets even more impressive with its earnings outperformance, where a mere two-cent loss per share sharply beat the 24-cent estimates.

Simultaneously, TipRanks analysts are bullish, bestowing Lovesac with a ‘strong buy’ rating and forecasting an upside potential of 57%. This optimism is anchored in Lovesac’s balanced omnichannel strategy, which cleverly integrates direct-to-consumer sales with an expanding network of showrooms.

Sherwin-Williams (SHW)

Source: Ken Wolter / Shutterstock.com

Sherwin-Williams (NYSE:SHW) is charting a colorful course in the paints, coatings and floorcoverings industry. With a significant 35.57% share price increase over the past year, the company unveiled cutting-edge technologies at FABTECH 2023 to enhance service efficiency and customer satisfaction. These advancements ensure rapid, easy and reliable support, underlining Sherwin-Williams’ dedication to improving businesses of all sizes.

Moreover, the ‘Anthology: Volume 1’ Colormix Forecast for 2024 by Sherwin-Williams introduces an inspiring array of 48 hues designed to craft diverse atmospheres. These palettes range from deeps and darks, setting the stage for tranquil retreats, to delicate tints that weave serene sophistication.

Financially, Sherwin-Williams paints a successful picture, reporting $5.25 billion in revenue, a slight increase of 0.41% YOY, and beating expectations by $26.7 million. Earnings-per-share reached $1.81, exceeding forecasts. With TipRanks analysts rating SHW as a ‘moderate buy’ and projecting a 4.94% upside potential, Sherwin-Williams is making a stronghold in the industry.

On the date of publication, Muslim Farooque 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

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.