TonyM
05-11-2007, 02:26 AM
This Bloomberg story has some interesting facts, and there was also a piece on Bloomberg tv today about the building of high end condo's and three casinos in downtown Detroit of all places.
`Chickens' Snap Up Home Depot Shares in U.S. Home Recovery Play
By Mark Clothier
May 11 (Bloomberg) -- Investors who don't have the guts to buy housing stocks just yet are betting on a residential rebound before it happens -- by buying shares of home-improvement retailers and makers of tools and tape measures.
``It's our chicken way of playing the housing recovery,'' said Robert Hagstrom, manager of the $5 billion Legg Mason Growth Trust in Wayne, Pennsylvania. He bought Home Depot Inc. shares this year.
Black & Decker Corp., the biggest U.S. power-tool company, and faucet-maker Masco Corp. say retailers are boosting orders, a sign the worst decline in home construction in 16 years may be nearing an end.
Masco said last week its biggest customers, which include Home Depot and Lowe's Cos., are buying more Delta taps and Behr paint, sending the Taylor, Michigan-based company's shares 9.5 percent higher. Shares of Black & Decker and hand-tool maker Stanley Works gained more than 16 percent this year.
Shares of Atlanta-based Home Depot and Lowe's, the world's largest home-improvement retailers, aren't doing that well yet. Home Depot's stock dropped 3.4 percent to $38.79 this year, and Lowe's shares are little changed at $31.08.
They have, however, outperformed house builders, and analysts including Danielle Fox of Merrill Lynch & Co. predict Home Depot shares will rise as much as 18 percent in the next year. Hagstrom now holds about 750,000 shares of the retailer.
Housing Rebound
The expectation that the worst of the housing slump is over is helping drive the rise in the toolmakers' shares and the predictions of similar gains to come for home-improvement retailers. Housing starts rebounded in February and March from a nine-year low.
``It's safe to assume things are stabilizing,'' said Sovereign Asset Management's Sarah Henry. Her firm owns 200,000 shares of Home Depot and has more than $2 billion under management. ``The long-term demographic trends still support home improvement.''
In September 1990, four months before U.S. housing starts recovered from half a decade of declines, shares of Towson, Maryland-based Black & Decker began a rally that more than doubled the stock price by 1992. Home Depot tripled in the same period. A growing housing market spurs homeowners to remodel bathrooms, buy appliances and replace kitchen floors.
Home Depot and Mooresville, North Carolina-based Lowe's say their sales are less tied to new house construction than to home ownership levels, income and the sale of existing homes. Sales of previously owned homes declined in March to their lowest levels since 2003, the National Association of Realtors said last month.
`Bottoming'
Still, AIG SunAmerica Asset Management's Steve Neimeth added to his Home Depot holdings in January as a way of betting on a recovery. He prefers the do-it-yourself industry over homebuilders such as Fort Worth, Texas-based D.R. Horton Inc. and Lennar Corp., the two biggest U.S. homebuilders by revenue.
``Things are bottoming,'' said Neimeth, who manages $900 million. ``If you believe housing is going to be safe, then you have to believe the consumer is in pretty decent shape.''
Neimeth, whose firm owns 150,000 Home Depot shares, bought the stock near its lowest price relative to earnings in at least 15 years. The company's stock market value is 14 times annual profit, compared with 20 times at Lennar.
Analysts' ratings on Lowe's and Home Depot point to a recovery as well. Analysts rate Lowe's 4.05 where 5 is a ``buy'' and 1 is a ``sell.'' That's an average 7.1 percent higher than companies in the Standard & Poor's 500, according to data compiled by Bloomberg. Home Depot is rated 5.7 percent higher, and Miami-based Lennar is 15 percent below the 3.78 S&P average.
`Patient Recovering'
Housing starts' strength in February and March ``gave us a good deal of reassurance,'' said Peter Jankovskis, the director of research at Oakbrook Investments LLC in Lisle, Illinois.
Oakbrook boosted its stake in Home Depot by 10 percent this year to about 547,000 shares, he said, and bought shares of Black & Decker late last year.
Black & Decker shares trade at $92.80 and are up 11 percent since the company said April 16 that orders were ``favorable.'' Shares of Masco have gained 9.3 percent since the company reported May 1 that profit fell less than analysts estimated.
While housing starts may no longer be falling, they may hover at a low point before actually starting to rebound, said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich.
``I've got to see the patient is looking to at least sit up on the edge of the bed,'' said Edwards, whose firm manages $9.6 billion. ``I think the patient is recovering, but not yet walking the halls.''
Making Money
New construction on single-family homes will fall to 1.16 million this year, the lowest since 1997, the National Association of Home Builders has said. That will rise in 2008 to 1.23 million, the builders said.
U.S. home-price declines this year will be steeper than earlier forecast because of the drop in subprime mortgage lending and the adoption of stricter loan standards, the National Association of Realtors said May 8.
Hagstrom is still optimistic. ``If you think housing takes time over the next couple of years to get better, that might not help homebuilding stocks immediately, but Home Depot can make a lot of money,'' he said.
`Chickens' Snap Up Home Depot Shares in U.S. Home Recovery Play
By Mark Clothier
May 11 (Bloomberg) -- Investors who don't have the guts to buy housing stocks just yet are betting on a residential rebound before it happens -- by buying shares of home-improvement retailers and makers of tools and tape measures.
``It's our chicken way of playing the housing recovery,'' said Robert Hagstrom, manager of the $5 billion Legg Mason Growth Trust in Wayne, Pennsylvania. He bought Home Depot Inc. shares this year.
Black & Decker Corp., the biggest U.S. power-tool company, and faucet-maker Masco Corp. say retailers are boosting orders, a sign the worst decline in home construction in 16 years may be nearing an end.
Masco said last week its biggest customers, which include Home Depot and Lowe's Cos., are buying more Delta taps and Behr paint, sending the Taylor, Michigan-based company's shares 9.5 percent higher. Shares of Black & Decker and hand-tool maker Stanley Works gained more than 16 percent this year.
Shares of Atlanta-based Home Depot and Lowe's, the world's largest home-improvement retailers, aren't doing that well yet. Home Depot's stock dropped 3.4 percent to $38.79 this year, and Lowe's shares are little changed at $31.08.
They have, however, outperformed house builders, and analysts including Danielle Fox of Merrill Lynch & Co. predict Home Depot shares will rise as much as 18 percent in the next year. Hagstrom now holds about 750,000 shares of the retailer.
Housing Rebound
The expectation that the worst of the housing slump is over is helping drive the rise in the toolmakers' shares and the predictions of similar gains to come for home-improvement retailers. Housing starts rebounded in February and March from a nine-year low.
``It's safe to assume things are stabilizing,'' said Sovereign Asset Management's Sarah Henry. Her firm owns 200,000 shares of Home Depot and has more than $2 billion under management. ``The long-term demographic trends still support home improvement.''
In September 1990, four months before U.S. housing starts recovered from half a decade of declines, shares of Towson, Maryland-based Black & Decker began a rally that more than doubled the stock price by 1992. Home Depot tripled in the same period. A growing housing market spurs homeowners to remodel bathrooms, buy appliances and replace kitchen floors.
Home Depot and Mooresville, North Carolina-based Lowe's say their sales are less tied to new house construction than to home ownership levels, income and the sale of existing homes. Sales of previously owned homes declined in March to their lowest levels since 2003, the National Association of Realtors said last month.
`Bottoming'
Still, AIG SunAmerica Asset Management's Steve Neimeth added to his Home Depot holdings in January as a way of betting on a recovery. He prefers the do-it-yourself industry over homebuilders such as Fort Worth, Texas-based D.R. Horton Inc. and Lennar Corp., the two biggest U.S. homebuilders by revenue.
``Things are bottoming,'' said Neimeth, who manages $900 million. ``If you believe housing is going to be safe, then you have to believe the consumer is in pretty decent shape.''
Neimeth, whose firm owns 150,000 Home Depot shares, bought the stock near its lowest price relative to earnings in at least 15 years. The company's stock market value is 14 times annual profit, compared with 20 times at Lennar.
Analysts' ratings on Lowe's and Home Depot point to a recovery as well. Analysts rate Lowe's 4.05 where 5 is a ``buy'' and 1 is a ``sell.'' That's an average 7.1 percent higher than companies in the Standard & Poor's 500, according to data compiled by Bloomberg. Home Depot is rated 5.7 percent higher, and Miami-based Lennar is 15 percent below the 3.78 S&P average.
`Patient Recovering'
Housing starts' strength in February and March ``gave us a good deal of reassurance,'' said Peter Jankovskis, the director of research at Oakbrook Investments LLC in Lisle, Illinois.
Oakbrook boosted its stake in Home Depot by 10 percent this year to about 547,000 shares, he said, and bought shares of Black & Decker late last year.
Black & Decker shares trade at $92.80 and are up 11 percent since the company said April 16 that orders were ``favorable.'' Shares of Masco have gained 9.3 percent since the company reported May 1 that profit fell less than analysts estimated.
While housing starts may no longer be falling, they may hover at a low point before actually starting to rebound, said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich.
``I've got to see the patient is looking to at least sit up on the edge of the bed,'' said Edwards, whose firm manages $9.6 billion. ``I think the patient is recovering, but not yet walking the halls.''
Making Money
New construction on single-family homes will fall to 1.16 million this year, the lowest since 1997, the National Association of Home Builders has said. That will rise in 2008 to 1.23 million, the builders said.
U.S. home-price declines this year will be steeper than earlier forecast because of the drop in subprime mortgage lending and the adoption of stricter loan standards, the National Association of Realtors said May 8.
Hagstrom is still optimistic. ``If you think housing takes time over the next couple of years to get better, that might not help homebuilding stocks immediately, but Home Depot can make a lot of money,'' he said.