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May Unemployment Falls: 5 Housing Picks With Solid Prospects
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The U.S. construction market has started reviving since last month from the worst economic crisis as a result of the coronavirus pandemic outbreak in late March. This revival can primarily be attributed to unexpected unemployment rate drop in May. Notably, the U.S. economy added jobs in May for the first time since the pandemic outbreak.
The S&P 500, NASDAQ and Dow Jones Industrial Average grew 2.6%, 2.1% and 3.2%, respectively, on Jun 5, after the unemployment level bettered analysts’ expectation of 19.5%. This signals that the downturn caused by COVID-19 is probably over and employers are ready to resume operations across the nation, as the economy gradually reopens.
Monthly Unemployment Rate Rebounds in May
Per the U.S. Bureau of Labor Statistics (BLS) report released on Jun 5, the May unemployment rate declined 1.4 percentage points to 13.3% from 14.7% reported in April. Importantly, the largest unemployment rate post the World War Two was recorded in the April data.
A 2.5-million employment gain in May was primarily led by growth in leisure and hospitality, construction, education and health services, as well as retail sectors. On the contrary, employment in the government sector continues to decline sharply. The BLS stated in the report that the rate would have been three percentage points higher, if the workers absent from work due to “other reasons” had correctly described their job status.
Temporary layoff during the reported month decreased an impressive 15% to 15.3 million, following a sharp increase of 16.2 million in April. In particular, for the Zacks Construction sector, employment increased 464,000 in May, after a decline of 995,000 in April.
Notably, 2.7 million people who had temporarily lost jobs during countrywide shutdown due to COVID-19 have returned to work. The recovering economy is a big relief for the housing industry, which accounts for nearly 3-5% of total GDP.
In May, U.S. homebuilders turned optimistic about housing prospects on low interest rates, withdrawal of stay-at-home orders, rising mortgage applications and gradually increasing buyer traffic (read more: Builders Confidence Up in May: Signs of Revival in Housing?). The data for this month is slated to be reported on Jun 16.
“While the labor market may be on the path to recovery, there is still a long way to go until the labor market returns to pre-crisis levels and makes up for lost growth.” said senior economist Daniel Zhao of Glassdoor.
The reopening of the country is a positive sign for many homebuilders and retailers that are involved with housing products. Notably, most of the industry players whose businesses are based on repair and remodeling activities also witnessed increased demand amid coronavirus woes. The home furnishing space is also experiencing pent-up demand as they are now more focused on e-commerce platforms and engaging with customers virtually.
The job market growth was cheered by U.S. President, Donald Trump, who signaled confidence in a V-shaped economic recovery.
Stocks to Bet On
Backed by encouraging housing prospects and improvement in unemployment rate, we have shortlisted five top-ranked stocks from the housing space that investors may add to their portfolio.
Its shares have gained 66.6% in the past three months compared with the industry’s 31% rally. The stock’s earnings estimates for the current year have witnessed an upward revision of 14% in the past seven days, reflecting analysts’ optimism over the company’s prospects. It has a three-five year (long term) expected earnings growth rate of 12.8%.
Beazer Homes USA, Inc. (BZH - Free Report) : This leading national homebuilder currently sports a Zacks Rank #1. Earnings estimates for fiscal 2020 have moved 7.7% upward in the past 60 days. The company’s shares have appreciated 6.4% in the past three months compared with the industry’s 8.6% growth. Although the stock has underperformed the industry, the positive estimate revision is encouraging.
Williams-Sonoma, Inc. (WSM - Free Report) : The company is a multi-channel specialty retailer of premium quality home products. Earnings estimates for fiscal 2020 have increased a notable 53.7% in the past 30 days. Shares of this Zacks Rank #2 company have surged 58.4% in the past three months compared with the industry’s 31% growth. Its long-term earnings are likely to grow 10%.
KB Home (KBH - Free Report) : This leading homebuilding company currently carries a Zacks Rank #2. It has a long-term expected earnings growth rate of 6.3%. In the past three months, the company’s shares have gained 26.1% compared with the industry’s 8.6% growth.
Otis Worldwide Corporation (OTIS - Free Report) : This world’s largest elevator and escalator manufacturing, installation and service company currently carries a Zacks Rank #2. Earnings estimates for 2020 have increased 3.7% in the past 30 days. It has a long-term expected earnings growth rate of 5%. The company’s shares have risen 23.8% in the past three months compared with the industry’s 48.4% rally. Otis Worldwide’s positive estimates revision reflects analysts’ optimism over the stock’s prospects.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
May Unemployment Falls: 5 Housing Picks With Solid Prospects
The U.S. construction market has started reviving since last month from the worst economic crisis as a result of the coronavirus pandemic outbreak in late March. This revival can primarily be attributed to unexpected unemployment rate drop in May. Notably, the U.S. economy added jobs in May for the first time since the pandemic outbreak.
The S&P 500, NASDAQ and Dow Jones Industrial Average grew 2.6%, 2.1% and 3.2%, respectively, on Jun 5, after the unemployment level bettered analysts’ expectation of 19.5%. This signals that the downturn caused by COVID-19 is probably over and employers are ready to resume operations across the nation, as the economy gradually reopens.
Monthly Unemployment Rate Rebounds in May
Per the U.S. Bureau of Labor Statistics (BLS) report released on Jun 5, the May unemployment rate declined 1.4 percentage points to 13.3% from 14.7% reported in April. Importantly, the largest unemployment rate post the World War Two was recorded in the April data.
A 2.5-million employment gain in May was primarily led by growth in leisure and hospitality, construction, education and health services, as well as retail sectors. On the contrary, employment in the government sector continues to decline sharply. The BLS stated in the report that the rate would have been three percentage points higher, if the workers absent from work due to “other reasons” had correctly described their job status.
Temporary layoff during the reported month decreased an impressive 15% to 15.3 million, following a sharp increase of 16.2 million in April. In particular, for the Zacks Construction sector, employment increased 464,000 in May, after a decline of 995,000 in April.
Notably, 2.7 million people who had temporarily lost jobs during countrywide shutdown due to COVID-19 have returned to work. The recovering economy is a big relief for the housing industry, which accounts for nearly 3-5% of total GDP.
In May, U.S. homebuilders turned optimistic about housing prospects on low interest rates, withdrawal of stay-at-home orders, rising mortgage applications and gradually increasing buyer traffic (read more: Builders Confidence Up in May: Signs of Revival in Housing?). The data for this month is slated to be reported on Jun 16.
“While the labor market may be on the path to recovery, there is still a long way to go until the labor market returns to pre-crisis levels and makes up for lost growth.” said senior economist Daniel Zhao of Glassdoor.
The reopening of the country is a positive sign for many homebuilders and retailers that are involved with housing products. Notably, most of the industry players whose businesses are based on repair and remodeling activities also witnessed increased demand amid coronavirus woes. The home furnishing space is also experiencing pent-up demand as they are now more focused on e-commerce platforms and engaging with customers virtually.
The job market growth was cheered by U.S. President, Donald Trump, who signaled confidence in a V-shaped economic recovery.
Stocks to Bet On
Backed by encouraging housing prospects and improvement in unemployment rate, we have shortlisted five top-ranked stocks from the housing space that investors may add to their portfolio.
RH (RH - Free Report) : This leading luxury retailer in the home furnishing space currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Its shares have gained 66.6% in the past three months compared with the industry’s 31% rally. The stock’s earnings estimates for the current year have witnessed an upward revision of 14% in the past seven days, reflecting analysts’ optimism over the company’s prospects. It has a three-five year (long term) expected earnings growth rate of 12.8%.
Beazer Homes USA, Inc. (BZH - Free Report) : This leading national homebuilder currently sports a Zacks Rank #1. Earnings estimates for fiscal 2020 have moved 7.7% upward in the past 60 days. The company’s shares have appreciated 6.4% in the past three months compared with the industry’s 8.6% growth. Although the stock has underperformed the industry, the positive estimate revision is encouraging.
Williams-Sonoma, Inc. (WSM - Free Report) : The company is a multi-channel specialty retailer of premium quality home products. Earnings estimates for fiscal 2020 have increased a notable 53.7% in the past 30 days. Shares of this Zacks Rank #2 company have surged 58.4% in the past three months compared with the industry’s 31% growth. Its long-term earnings are likely to grow 10%.
KB Home (KBH - Free Report) : This leading homebuilding company currently carries a Zacks Rank #2. It has a long-term expected earnings growth rate of 6.3%. In the past three months, the company’s shares have gained 26.1% compared with the industry’s 8.6% growth.
Otis Worldwide Corporation (OTIS - Free Report) : This world’s largest elevator and escalator manufacturing, installation and service company currently carries a Zacks Rank #2. Earnings estimates for 2020 have increased 3.7% in the past 30 days. It has a long-term expected earnings growth rate of 5%. The company’s shares have risen 23.8% in the past three months compared with the industry’s 48.4% rally. Otis Worldwide’s positive estimates revision reflects analysts’ optimism over the stock’s prospects.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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