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The Zacks Analyst Blog Highlights: PGT Innovations, Armstrong Flooring, Fastenal and American Woodmark

Zacks Equity Research
We have highlighted five inverse ETFs that crushed the market last month and should continue doing to do so at least in the near term if the same trends persist.

For Immediate Release

Chicago, IL – October 29, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include PGT Innovations, Inc. PGTI, Armstrong Flooring, Inc. AFI, Fastenal Company FAST and American Woodmark Corp. AMWD.

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Here are highlights from Friday’s Analyst Blog:

Housing Bubble a Myth: Buy These 4 Winners

A series of dismal economic reports about America’s housing industry have been released recently. This has led to speculation that the economy is headed for yet another housing bubble. Having said that, the U.S. housing market is gaining strength, courtesy of steady demand and a business-friendly environment. Economists largely believe that this downturn is going to be momentary unlike what happened in 2008.

Further, robust labor market conditions, a hiring boom in the construction industry and increase in millennials will lead to improving conditions for the housing market. Under conditions, where the space is about to stage a rebound, investing in housing stocks seems prudent.

Fears of a 2008 Type Bubble Unfounded

Most of the housing data released this month has been disappointing. Housing Starts plummeted to 1,201000 in September from 1,268,000 in the previous month. Building permits declined to 1,241,000 from 1,249,000 in August. Further, construction spending, new home sales and existing home sales declined to 0.1%, 553,000 and 5.15 million units, respectively last month.

During the last economic crisis about 10 years ago, markets were overheated amid a glut of new houses. Further, subprime mortgage financing weighed heavily on the markets, resulting in a bump in speculative inventory. Taking a closer look at the current scenario, the housing industry is actually reeling under the pressure of extreme paucity of skilled labor amid rising prices of materials.

Meanwhile, the economy already expanded at a seasonally adjusted rate of 4.2% in the April-June quarter, per the Commerce Department. Meanwhile, the Labor Department stated that employers in the construction industry added 23,000 new construction jobs in September, while it has added 315,000 jobs over the past 12 months. It is, therefore, evident that the housing space is recovering and lackluster economic data will not mar the industry’s fortunes in the long run.

Metropolitan Demand and Baby Boomers to Propel Sector’s Growth

Rising wages and a higher number of job openings have resulted in increased demand for land ownership in the metropolitan areas of the country. These areas have witnessed a surge in housing demand, north of 3% on average annual basis.

Further, growth in population has also resulted in increased migration toward the metros. This trend is prevalent among millennials and baby boomers who are earning well and moving to bigger cities in pursuit of better lives. Such a trend has kept housing demand steady in these areas.

Also, pending home sales surged 0.5% in the last month after falling 1.9% in August. Per the National Association of Home Builders/Wells Fargo (“NAHB”), the monthly confidence index went up one point to 68% in October. The index’s three sub-gauges, current sales condition ticked up one point to 74, and expectations for sales over the next six months rose one point to 75. The gauge of buyer traffic witnessed the largest gain, up four points to 53. 

4 Best Choices

Strong economic fundamentals and increase in millennial population has boosted the housing market in the recent past. The current bubble is largely momentary as it stems from labor shortage. Moreover, the hiring boom in construction sheds light on the fact that such impediments would not last long.

In this context, we have selected four stocks that are expected to gain from these factors. These stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PGT Innovations, Inc. is a leading manufacturer and supplier of residential impact-resistant windows and doors.

The company is based out of North Venice, FL. The expected earnings growth rate for the current year is 77.75%. The Zacks Consensus Estimate for the current year has improved 9.1% over the past 90 days.

Armstrong Flooring, Inc. is engaged in the design and manufacture of flooring solutions primarily in North America.

The company is based out of Lancaster, PA. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 1.1% over the past 60 days.

Fastenal Company is the producer of bolts, nuts, screws, studs and related washers are used in manufactured products and building projects.

This company is based out of Winona, MN. The expected earnings growth rate for the current year is 33.31%. The Zacks Consensus Estimate for the current year has improved 0.8% over the past 60 days.

American Woodmark Corp. manufactures and distributes kitchen, bath and home organization products for the remodeling and new home construction markets in the United States.

This company is based out of Winchester, VA. The expected earnings growth rate for the current year is 45.42%. The Zacks Consensus Estimate for the current year has improved 1.1% over the past 60 days.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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PGT, Inc. (PGTI) : Free Stock Analysis Report
 
Fastenal Company (FAST) : Free Stock Analysis Report
 
Armstrong Flooring, Inc. (AFI) : Free Stock Analysis Report
 
American Woodmark Corporation (AMWD) : Free Stock Analysis Report
 
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