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Home Improvement Stocks are Positioned for Fireworks .. Top Opportunities (BLDR, GBHL, HD, FND, LOW, WHR, HVT, SHW)

According to ResearchAndMarkets, the Global Home Improvement Market is already a $1.5 trillion marketplace in 2021. The analysis suggests it will continue…

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According to ResearchAndMarkets, the Global Home Improvement Market is already a $1.5 trillion marketplace in 2021. The analysis suggests it will continue to grow at a solid 5-6% CAGR over coming years.

But that might be a low-ball forecast. Analysis came out this week from NAHB estimating that residential remodeling activity jumped 7% in 2022 following 13% growth in 2021.

One big factor is the post-pandemic trend toward virtual engagement and work-from-home. People are spending more time at home and multi-purposing homes in a range of ways.

Another big factor is the boom we have been seeing in the housing market as millennials finally move to the suburbs and exurbs and raise families. They represent the biggest generation in history. At the same time, Boomers are downsizing in retirement after the kids have gone off to college or out into the world.

That adds up to a lot of people getting ready to sell their homes and a lot of other people ready to buy them. Historically, that’s a tremendous environment for home improvement trends.

We that in mind, we take a look below at some of the most interesting stories developing among stocks in that space.

 

Builders FirstSource Inc. (NYSE:BLDR) is a central play in the home improvement theme. And the action in the stock’s shares reflects that as well as the spark going on in this theme. The company bills itself as the largest U.S. supplier of building products, prefabricated components, and value-added services to the professional market segment for new residential construction and repair and remodeling.

Its products include factory-built roof and floor trusses, wall panels and stairs, vinyl windows, custom millwork and trim, and engineered wood.

Builders FirstSource Inc. (NYSE:BLDR) recently announced that Dave Rush has been named Chief Executive Officer, effective immediately. Mr. Rush has served as Interim Chief Executive Officer of Builders FirstSource since November 18, 2022, when he was also appointed to the Company’s Board of Directors.

Board Chair Paul Levy stated, “We are pleased to announce that Dave Rush has been appointed Chief Executive Officer. His strong vision and deep understanding of our business affords him insight into our many locations and diverse value-added product lines, as well as our growing digital efforts. Dave is an experienced operator, has successfully navigated a variety of economic environments, and has proven over the course of his 23-year tenure with Builders FirstSource a commitment to operational excellence. Given this experience, our Board has concluded that we are well positioned with Dave Rush at the helm of the Company.”

Even in light of this news, BLDR hasn’t really done much of anything over the past week, with shares logging no net movement over that period. Shares of the stock have powered higher over the past month, rallying roughly 21% in that time on strong overall action.

Builders FirstSource Inc. (NYSE:BLDR) managed to rope in revenues totaling $5.8B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 4.6%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($85M against $2.3B, respectively).

 

Global Entertainment Holdings Inc. (OTC US:GBHL) is a new play in the home improvement space after announcing this morning a share exchange merger agreement to reverse a company called DCE Construction, Inc., d/b/a Mesa Garage Doors, onto the OTC exchange.

In other words, GBHL is now Mesa. And Mesa, a Southern California-based leader in home improvement solutions focused on selling, servicing, and installing garage and entry doors as well as custom gates, is impressive at first glance based on information in this morning’s announcement. Furthermore, the release noted that the company plans to immediately begin steps to change the company’s name and stock symbol with FINRA.

Global Entertainment Holdings Inc. (OTC US:GBHL) has been warming up to this step for a few weeks. On Jan 9, Mesa’s founders purchased a controlling interest in GBHL through the acquisition of the substantial majority of Global’s Series C Convertible Preferred Stock. The merger deal was then completed through a Share Exchange and Reorganization Agreement.

Both Mesa and Global are currently undergoing a two-year audit by PCOAB registered audit firms that is expected to be complete in the next two months. The completion of the audits will position the Company to become a fully reporting company with the SEC. Management notes that the company reports having minimal debt together with gross revenues of over twenty million dollars in 2022.

More to the point for our purposes today: GBHL is a revenue-producing growth name in the exciting home improvement space. Overnight. Just like that. Snap.

Global Entertainment Holdings Inc. (OTC US:GBHL) incoming new CEO, Dwight Esnard, who also happens to be the founder of Mesa, commented, “Going public is the beginning of an exciting new chapter for Mesa to continue our trajectory for growth with an increased focus in Los Angeles, San Diego, Ventura, and Riverside Counties, as well as through expanding our product and service offerings to other areas of home and property improvement. We plan to roll out an aggressive growth strategy in the near future to expand our reach to new locations as well as acquiring strategically aligned companies to expand our market share. This transaction, which makes Mesa a publicly-traded company, is integral to achieving those strategic goals.”

 

Floor & Decor Holdings Inc. (NYSE:FND) bills itself as a leading high-growth specialty retailer of hard-surface flooring, operating 178 warehouse-format stores and five design studios across 35 states as of September 29, 2022.

The stores offer homeowners and professionals the industry’s broadest in-stock selection of tile, natural wood, natural stone, laminate, and luxury vinyl plank, under one roof. In addition, Floor & Decor stocks the necessary tools, decorative materials, wall tile, and related accessories for hard-surface flooring projects. Stores carry over 1 million square feet of in-stock flooring and offer free design services, as well as a dedicated pro sales team.

Floor & Decor Holdings Inc. (NYSE:FND) recently announced that it will expand its nationwide footprint when it opens the doors to its newest location in Lafayette, Louisiana. This store opening marks the company’s first warehouse store in the Lafayette market. The Floor & Decor warehouse store and design center will open with a team of about 50 full-time and part-time associates led by Reggie Mack, the new store’s Chief Executive Merchant.

“Floor & Decor is thrilled to open our doors in Lafayette,” said Mack. “We are excited to introduce both Professional customers, as well as Homeowners, to our one-stop solution for their flooring needs with an extensive selection of in-stock, trend-right flooring options. We offer unmatched service and quality flooring at unbeatable prices. With our free design services, we look forward to helping every customer turn their vision into reality.”

If you’re long this stock, then you’re liking how the stock has responded to the announcement. FND shares have been moving higher over the past week overall, pushing about 4% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 23% in that time on strong overall action.

Floor & Decor Holdings Inc. (NYSE:FND) has a significant war chest ($7.7M) of cash on the books, which must be weighed relative to about $1.1B in total current liabilities. FND is pulling in trailing 12-month revenues of $4.1B. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 25.2%.

 

Other key names in the space include Home Depot Inc. (NYSE:HD), Lowe’s Cos. (NYSE:LOW), Whirlpool Corp. (NYSE:WHR), Haverty Furniture Cos. Inc. (NYSE:HVT), and Sherwin-Williams Co. (NYSE:SHW).

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The post Home Improvement Stocks are Positioned for Fireworks .. Top Opportunities (BLDR, GBHL, HD, FND, LOW, WHR, HVT, SHW) appeared first on Wall Street PR.

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February Employment Situation

By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…

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16 hours ago

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March 9, 2024

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By Paul Gomme and Peter Rupert

The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.

Temporary help services employment continues a steep decline after a sharp post-pandemic rise.

Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.

The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.

The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.

Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.

As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.

Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.

The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.

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Mortgage rates fall as labor market normalizes

Jobless claims show an expanding economy. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.

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March 8, 2024

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Everyone was waiting to see if this week’s jobs report would send mortgage rates higher, which is what happened last month. Instead, the 10-year yield had a muted response after the headline number beat estimates, but we have negative job revisions from previous months. The Federal Reserve’s fear of wage growth spiraling out of control hasn’t materialized for over two years now and the unemployment rate ticked up to 3.9%. For now, we can say the labor market isn’t tight anymore, but it’s also not breaking.

The key labor data line in this expansion is the weekly jobless claims report. Jobless claims show an expanding economy that has not lost jobs yet. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.

From the Fed: In the week ended March 2, initial claims for unemployment insurance benefits were flat, at 217,000. The four-week moving average declined slightly by 750, to 212,250


Below is an explanation of how we got here with the labor market, which all started during COVID-19.

1. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.

2. Early in the labor market recovery, when we saw weaker job reports, I doubled and tripled down on my assertion that job openings would get to 10 million in this recovery. Job openings rose as high as to 12 million and are currently over 9 million. Even with the massive miss on a job report in May 2021, I didn’t waver.

Currently, the jobs openings, quit percentage and hires data are below pre-COVID-19 levels, which means the labor market isn’t as tight as it once was, and this is why the employment cost index has been slowing data to move along the quits percentage.  

2-US_Job_Quits_Rate-1-2

3. I wrote that we should get back all the jobs lost to COVID-19 by September of 2022. At the time this would be a speedy labor market recovery, and it happened on schedule, too

Total employment data

4. This is the key one for right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, which would have been in line with the job growth rate in February 2020. Today, we are at 157,808,000. This is important because job growth should be cooling down now. We are more in line with where the labor market should be when averaging 140K-165K monthly. So for now, the fact that we aren’t trending between 140K-165K means we still have a bit more recovery kick left before we get down to those levels. 




From BLS: Total nonfarm payroll employment rose by 275,000 in February, and the unemployment rate increased to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing.

Here are the jobs that were created and lost in the previous month:

IMG_5092

In this jobs report, the unemployment rate for education levels looks like this:

  • Less than a high school diploma: 6.1%
  • High school graduate and no college: 4.2%
  • Some college or associate degree: 3.1%
  • Bachelor’s degree or higher: 2.2%
IMG_5093_320f22

Today’s report has continued the trend of the labor data beating my expectations, only because I am looking for the jobs data to slow down to a level of 140K-165K, which hasn’t happened yet. I wouldn’t categorize the labor market as being tight anymore because of the quits ratio and the hires data in the job openings report. This also shows itself in the employment cost index as well. These are key data lines for the Fed and the reason we are going to see three rate cuts this year.

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Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month

Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month

Last month we though that the January…

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March 8, 2024

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Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month

Last month we though that the January jobs report was the "most ridiculous in recent history" but, boy, were we wrong because this morning the Biden department of goalseeked propaganda (aka BLS) published the February jobs report, and holy crap was that something else. Even Goebbels would blush. 

What happened? Let's take a closer look.

On the surface, it was (almost) another blockbuster jobs report, certainly one which nobody expected, or rather just one bank out of 76 expected. Starting at the top, the BLS reported that in February the US unexpectedly added 275K jobs, with just one research analyst (from Dai-Ichi Research) expecting a higher number.

Some context: after last month's record 4-sigma beat, today's print was "only" 3 sigma higher than estimates. Needless to say, two multiple sigma beats in a row used to only happen in the USSR... and now in the US, apparently.

Before we go any further, a quick note on what last month we said was "the most ridiculous jobs report in recent history": it appears the BLS read our comments and decided to stop beclowing itself. It did that by slashing last month's ridiculous print by over a third, and revising what was originally reported as a massive 353K beat to just 229K,  a 124K revision, which was the biggest one-month negative revision in two years!

Of course, that does not mean that this month's jobs print won't be revised lower: it will be, and not just that month but every other month until the November election because that's the only tool left in the Biden admin's box: pretend the economic and jobs are strong, then revise them sharply lower the next month, something we pointed out first last summer and which has not failed to disappoint once.

To be fair, not every aspect of the jobs report was stellar (after all, the BLS had to give it some vague credibility). Take the unemployment rate, after flatlining between 3.4% and 3.8% for two years - and thus denying expectations from Sahm's Rule that a recession may have already started - in February the unemployment rate unexpectedly jumped to 3.9%, the highest since February 2022 (with Black unemployment spiking by 0.3% to 5.6%, an indicator which the Biden admin will quickly slam as widespread economic racism or something).

And then there were average hourly earnings, which after surging 0.6% MoM in January (since revised to 0.5%) and spooking markets that wage growth is so hot, the Fed will have no choice but to delay cuts, in February the number tumbled to just 0.1%, the lowest in two years...

... for one simple reason: last month's average wage surge had nothing to do with actual wages, and everything to do with the BLS estimate of hours worked (which is the denominator in the average wage calculation) which last month tumbled to just 34.1 (we were led to believe) the lowest since the covid pandemic...

... but has since been revised higher while the February print rose even more, to 34.3, hence why the latest average wage data was once again a product not of wages going up, but of how long Americans worked in any weekly period, in this case higher from 34.1 to 34.3, an increase which has a major impact on the average calculation.

While the above data points were examples of some latent weakness in the latest report, perhaps meant to give it a sheen of veracity, it was everything else in the report that was a problem starting with the BLS's latest choice of seasonal adjustments (after last month's wholesale revision), which have gone from merely laughable to full clownshow, as the following comparison between the monthly change in BLS and ADP payrolls shows. The trend is clear: the Biden admin numbers are now clearly rising even as the impartial ADP (which directly logs employment numbers at the company level and is far more accurate), shows an accelerating slowdown.

But it's more than just the Biden admin hanging its "success" on seasonal adjustments: when one digs deeper inside the jobs report, all sorts of ugly things emerge... such as the growing unprecedented divergence between the Establishment (payrolls) survey and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 275K payrolls were added, the Household survey found that the number of actually employed workers dropped for the third straight month (and 4 in the past 5), this time by 184K (from 161.152K to 160.968K).

This means that while the Payrolls series hits new all time highs every month since December 2020 (when according to the BLS the US had its last month of payrolls losses), the level of Employment has not budged in the past year. Worse, as shown in the chart below, such a gaping divergence has opened between the two series in the past 4 years, that the number of Employed workers would need to soar by 9 million (!) to catch up to what Payrolls claims is the employment situation.

There's more: shifting from a quantitative to a qualitative assessment, reveals just how ugly the composition of "new jobs" has been. Consider this: the BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs. Well, that's great... until you look back one year and find that in February 2023 the US had 133.2 million full-time jobs, or more than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).

Here is a summary of the labor composition in the past year: all the new jobs have been part-time jobs!

But wait there's even more, because now that the primary season is over and we enter the heart of election season and political talking points will be thrown around left and right, especially in the context of the immigration crisis created intentionally by the Biden administration which is hoping to import millions of new Democratic voters (maybe the US can hold the presidential election in Honduras or Guatemala, after all it is their citizens that will be illegally casting the key votes in November), what we find is that in February, the number of native-born workers tumbled again, sliding by a massive 560K to just 129.807 million. Add to this the December data, and we get a near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!

The offset? A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!

Said otherwise, not only has all job creation in the past 6 years has been exclusively for foreign-born workers...

Source: St Louis Fed FRED Native Born and Foreign Born

... but there has been zero job-creation for native born workers since June 2018!

This is a huge issue - especially at a time of an illegal alien flood at the southwest border...

... and is about to become a huge political scandal, because once the inevitable recession finally hits, there will be millions of furious unemployed Americans demanding a more accurate explanation for what happened - i.e., the illegal immigration floodgates that were opened by the Biden admin.

Which is also why Biden's handlers will do everything in their power to insure there is no official recession before November... and why after the election is over, all economic hell will finally break loose. Until then, however, expect the jobs numbers to get even more ridiculous.

Tyler Durden Fri, 03/08/2024 - 13:30

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