Four Other Stocks to Ride the Housing Recovery (GNW, MHK, SWK, TWC)
It is clear that as the housing market recovers, the home builder stocks, and even the big-box home improvement retailers Home Depot (NYSE: HD) and Lowe's Companies (NYSE: LOW), have benefited from the boom.
But in a research report released Tuesday, UBS (NYSE: UBS) analysts offer a list of additional stocks that are also poised to benefit. They range from lenders such as Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC) to insurers like MetLife (NYSE: MET).
Here is a quick look at how four additional UBS picks -- Genworth Financial (NYSE: GNW), Mohawk Industries (NYSE: MHK), Stanley Black & Decker (NYSE: SWK) and Time Warner Cable (NYSE: TWC) -- have fared and what analysts expect from them.
Former Senator Kent Conrad just joined the board of this provider of mortgage insurance and other insurance products. The Richmond, Virginia-based company is an S&P 500 component that sports a market capitalization near $5 billion. But it offers no dividend.
The price-to-earnings (P/E) ratio is lower than the industry average, but the long-term earnings per share (EPS) growth forecast is only about five percent. Genworth's operating margin is higher than the industry average. The short interest is about three percent of the float.
Only five of the 12 analysts surveyed by Thomson/First Call who follow this stock recommend buying shares. The consensus recommendation has been to hold shares for at least three months. The share price has overrun the mean price target, or where analysts expect the share price to go. That means the analysts currently see no upside potential.
While the share price of Genworth has risen more than 28 percent year to date, shares have pulled back a bit from a recent 52-week high. The stock has outperformed larger competitors MetLife and Prudential Financial (NYSE: PRU) over the past six months.
This maker of rugs, carpets and other floorings exceeded consensus EPS estimates in the past four quarters, and analysts are looking for more than 62 percent year-over-year growth in EPS for the current quarter. Mohawk has a market cap of about $8.7 billion, though it does not offer a dividend.
The long-term EPS growth forecast is about 25 percent, but the return on equity is only about seven percent. And the short interest is about two percent of the total float.
Seven of the 12 analysts surveyed recommend buying shares, and none recommend selling them. However, their mean price target represents only about two percent potential upside relative to the current share price. However, that target would be a new multiyear high.
The share price is up about 19 percent year to date, though it has pulled back from a recent multiyear high. Over the past six months, this stock has outperformed the S&P 500.
Stanley Black & Decker
This maker of power and hand tools recently completed its acquisition of Hong Kong-based Infastech, a maker of fasteners. Stanley Black & Decker has a market cap of more than $13 billion and a dividend yield of about 2.4 percent.
This S&P 500 company has a long-term EPS growth forecast of about 11 percent. Its P/E ratio is higher than the industry average, but so is its operating margin. The number of shares sold short represents almost five percent of the float.
Nine of the 17 polled analysts recommend buying the stock, but none recommend selling shares. The analysts believe Stanley Black & Decker has only a little head room, as their price target is less than five higher than the current share price.
Shares are trading about eight percent higher year-to-date and hit a 52-week high yesterday. However, the stock has underperformed competitors Danaher (NYSE: DHR) and Makita (NASDAQ: MKTAY) over the past six months.
Time Warner Cable
This New York City-based provider of television, Internet and phone services is expected to reveal double-digit percentage EPS growth when it reports results for the current quarter. The more than $28 billion market cap company is also an S&P 500 component, and its dividend yield is about 2.7 percent.
The P/E ratio is less than that of competitor Comcast, and the long-term EPS growth forecast is about 13 percent. Time Warner Cable's return on equity is about 29 percent. The short interest is about three percent of the company's float.
For at least three months, the analysts' consensus recommendation has been to buy shares. The mean price target is more than seven percent higher than the current share price and would be a new multiyear high.
The share price plunged at the end of January upon the retirement announcement of the CEO, and it has yet to fully recover. Over the past six months, the stock has underperformed Comcast and the broader markets.
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