September 22, 2023

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3 Quality Home Improvement Stocks to Buy This Summer

The home improvement industry is poised to flourish in the long run, with easing inflation and rising demand for smart and energy-efficient remodeling solutions. So, quality home improvement stocks National Presto Industries, Inc. (NPK), Tile Shop Holdings, Inc. (TTSH), and Bassett Furniture Industries, Incorporated (BSET) could be wise additions to your portfolio.

Technology and innovation are altering the home remodeling industry, giving homeowners an extensive range of new tools and materials to help them build the homes of their dreams.

Rising demand for remodeling is fuelling the growth of the home improvement services market. Moreover, technological advancements such as visualization apps and 3D software are helping to improve the home remodeling process.

The home improvement services market is expected to reach $585.30 billion by 2030, growing at a CAGR of 6.2%.

In addition, federal tax credits to encourage homeowners to adopt energy-efficient home improvements are also boosting the industry.

Take a detailed look at the stocks mentioned above:

National Presto Industries, Inc. (NPK)

NPK provides housewares and small electric appliances, defense and safety products in North America.

NPK’s trailing-12-month Price/Book multiple of 1.63 is 37.9% lower than the industry average of 2.62. Its trailing-12-month EV/Sales multiple of 1.30 is 25.3% lower than the industry average of 1.73.

NPK’s trailing-12-month ROTA of 6.73% is 31% higher than the industry average of 5.14%. Its trailing-12-month levered FCF margin of 6.84% is 30.5% higher than the industry average of 5.24%.

NPK’s net sales came in at $80.41 million for the first quarter that ended April 2, 2023, up 32.4% year-over-year. The company’s net earnings increased 204.6% year-over-year to $8.87 million, while its EPS came in at $1.25, representing a 204.9% increase year-over-year.

NPK’s shares have gained 22.8% over the past six months to close the last trading session at $75.77.

NPK’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

NPK has a B grade for Growth, Value, and Quality. It is ranked first among 57 stocks in the B-rated Home Improvement & Goods industry. Click here for the additional POWR Ratings for Stability, Sentiment, and Momentum for NPK.

Tile Shop Holdings, Inc. (TTSH)

TTSH operates as a specialty retailer of natural stone and synthetic tiles, setting and maintenance materials, and other related accessories. The Plymouth, Minn., company provides natural stone products, such as marble, travertine, granite, quartz, and synthetic products, including ceramic, porcelain, glass, cement, wood look, and metal tiles under the Rush River and Fired Earth brands.

TTSH’s forward EV/Sales of 0.99x is 14.2% lower than the industry average of 1.16x. Its forward Price/Sales of 0.62x is 26.9% lower than the industry average of 0.85x.

TTSH’s trailing-12-month ROTA of 4.39% is 20.6% higher than the 3.64% industry average, while its trailing-12-month gross profit margin of 65.35% is 85.4% higher than the industry average of 35.24%.

TTSH total liabilities came in at $223.44 million for the period that ended March 31, 2023, compared to $227.05 million for the period that ended December 31, 2022. Also, its total long-term debt came in at $25 million, compared to $45.40 million for the same period.

Street expects TTSH’s revenue to increase 2.8% year-over-year to $408.61 million for the year ending December 2024. Its EPS is expected to grow 19.1% year-over-year to $0.25 for the same period. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 75.6% to close the last trading session at $5.55.

It’s no surprise that TTSH has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Quality and a B for Sentiment. It is ranked #2 in the same industry.

Beyond what is stated above, we’ve also rated TTSH for Growth, Value, Momentum, and Stability. Get all TTSH ratings here.

Bassett Furniture Industries, Incorporated (BSET)

BSET develops, manufactures, sources, sells, and distributes home furnishings internationally. It operates in three segments: Wholesale; Retail company-owned stores; and Logistical services. The company operates a network of more than 63 company-owned and 34 licensee-owned stores.

On May 15, 2023, BSET announced an agreement with Acuative to meet its expanding demand for efficient, cutting-edge networking communications and security solutions. This enables BSET IT team to concentrate on other activities and upcoming technology that will benefit customers.

BSET’s forward EV/Sales of 0.43x is 62.8% lower than the industry average of 1.16x. Its forward Price/Book of 0.74x is 70.2% lower than the industry average of 2.49x.

BSET’s trailing-12-month ROTA of 4.32% is 18.6% higher than the industry average of 3.64%. Its trailing-12-month gross profit margin of 52.55% is 49.1% higher than the industry average of 35.24%.

BSET total current liabilities came in at $79.69 million for the period that ended May 27, 2023, compared to $100.83 million for the period that ended November 26, 2022. Also, its total long liabilities came in at $101.45 million, compared to $109.84 million for the same period.

Analysts expect BSET’s revenue to increase 6.8% year-over-year to $444.73 million for the year ending November 2024. Its EPS is expected to increase 92.6% year-over-year to $1.81 for the same period. It surpassed EPS estimates in three of four trailing quarters. The stock has gained 9.9% over the past month to close the last trading session at $16.

BSET’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.

It is ranked #4 in the same industry. It has an A grade for Quality and a B for Value and Sentiment. To see additional BSET ratings for Momentum, Stability, and Growth, click here.

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NPK shares were unchanged in premarket trading Monday. Year-to-date, NPK has gained 16.85%, versus a 15.54% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master’s degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More…

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