Masco Hits a 52-Week High - Analyst Blog

On Jan 6, 2014, shares of Masco Corporation ( MAS ) reached a 52-week high of $23.36, eventually closing at $22.84. The closing price represented a six month return of around 16%.

Share Price Drivers

Share price of Masco has been gaining momentum from the steady improvement in the construction industry. Masco is thus seeing a concomitant rise in demand and volume for its home improvement products like Delta faucets, Behr paint and Milgard windows.

This Zacks Rank #2 (Buy) company delivered back-to-back strong results for the second and third quarters driven by volume growth.

Volumes benefited from new products/programs launches; increased new home construction activity and improvement in repair/remodel activity in North America; and increased outside U.S. sales. In fact, in the third quarter, the company saw some traction in consumer spending on large ticket home improvements after struggling in the past few quarters.

In addition, at the third-quarter conference call, management stated that the fourth quarter was off to a strong start with October sales up in high single-digits as the positive trends in new home construction and home improvement in North America continues.

A slew of housing data released recently shows that the housing recovery is still very much intact despite rising interest rates. Data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau showed that sales of newly built, single-family homes rose 25.4% in Oct 2013. Another data released by the Department showed that Nov 2013 housing starts surged to their highest in nearly six years.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), known as the homebuilder sentiment index, jumped 4 points to 58 in Dec 2013 from 54 in July. This was the seventh consecutive monthly increase in the index showing that the recent interest rate hikes have not been able to dampen the housing recovery completely.

The solid new home construction fundamentals will increase the demand for Masco's products. Management also believes that its strategic and cost control initiatives will boost profits further in the future quarters.

Other Stocks to Consider

Other positive-ranked stocks in the building/construction industry are United Rentals, Inc. ( URI ) and James Hardie Industries plc ( JHX ). WhileJames Hardie carries a Zacks Rank #1 (Strong Buy), United Rentals has a Zacks Rank #2 (Buy). Another stock worth considering in the construction industry is Toll Brothers, Inc. ( TOL ) which carries Zacks Rank #2.

JAMES HARDI-ADR (JHX): Free Stock Analysis Report

MASCO (MAS): Free Stock Analysis Report

TOLL BROTHERS (TOL): Free Stock Analysis Report

UTD RENTALS INC (URI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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