The housing market has largely been frozen over the past two years. Rising interest rates made it unattractive for those who locked in a low mortgage rate to move. And the higher costs kept potential homebuyers on the sidelines.
The thaw is starting. Interest rates are already coming down ahead of the Federal Reserve’s action. And as the housing market thaws, home improvement projects and spending may soar. That bodes well for several companies.
For instance, paint giant The Sherwin-Williams Company (SHW) is already up 35% over the past year, slightly outperforming the stock market. Paint is usually always in demand, and Sherwin-Williams is an industry leader.
Sherwin-Williams shares trade at 28 times earnings, a bit on the pricey side, but the company has been able to see earnings rise 12% over the past year amid a 0.5% increase in revenue. That’s helping to improve the company’s profitability.
Action to take: Investors may like shares here, or on any seasonal drop in the markets over the coming weeks. At current prices, Sherwin-Williams also pays a 0.8% dividend, which the company has a history of growing over time.
For traders, the January 2025 $410 calls, last trading for about $7.50, could see mid-double-digit returns on a further rally into the new year and a few interest rate cuts boosting the housing market.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.