The housing market is in recovery mode, and homebuilding
stocks are not the only way to take advantage of this trend.
Investors can also look at paint makers Valspar (
) andSherwin-Williams (
Earlier this month, Valspar squeaked by views with fiscal Q4
earnings that rose 2% to 86 cents a share. It topped expectations
by a penny. But sales eased 2% to $1.02 billion vs. views of
Despite the mixed quarterly results, Valspar's profit grew 24%
to $3.28 a share for fiscal 2012, ended Oct. 26. That's up from
19% growth in fiscal 2011. The company pegged fiscal 2013
earnings at $3.65 to $3.85 a share, which represents growth of
11% to 17%.
The company pays a dividend of 20 cents a share each quarter,
or 80 cents on an annualized basis. It has an annualized yield of
about 1.3%, which is the second lowest in IBD's paints industry
group. Still, Valspar has raised its dividend for 34 straight
Valspar is near a record high after clearing a 59.91 buy point
from a flat base last week. Despite light holiday trading, the
stock broke out on volume 79% above average.
Sherwin-Williams has delivered four straight quarters of
double-digit profit growth. In late October, it reported Q3
earnings that rose 31% to $2.24 a share and beat expectations by
4 cents. But sales rose 5% to just over $2.6 billion, slightly
Analysts see Sherwin-Williams' full-year profit rising 32% to
$6.52 a share. That would be up from 10% growth in 2011.
Earlier this month, the company agreed to buy Mexican paint
firm Consorcio Comex for $2.34 billion in cash, including debt.
The deal will greatly increase Sherwin-Williams' presence in the
Mexico market, where it has few stores.
Sherwin-Williams pays a quarterly dividend of 39 cents a
share. It has an annualized yield of about 1%. The company has
raised its payout for more than 30 years.
Last week, Sherwin-Williams cleared a 156.60 buy point in a
six-week flat base. The structure could also be interpreted as a
But either way, the buy point is the same. The stock is
holding near a record high.