Lumber Liquidators Holdings Inc (LL), Beacon Roofing Supply, Inc. (BECN): A Caveat for Investors, The Housing Market

Roofing

Again, the disappointing housing starts for June will most likely weigh on the company as well. Entities like  Beacon Roofing Supply, Inc. (NASDAQ:BECN) rely on sustained growth over multiple months and quarters. However, investors should note that Beacon Roofing Supply, Inc. (NASDAQ:BECN)’s strength is its substantial market reach. It has 229 branches and operates in 38 states and 6 Canadian provinces.

Furthermore, Beacon Roofing Supply, Inc. (NASDAQ:BECN) offers complementary building products. These include siding, composite decking, specialty Lumber Liquidators Holdings Inc (NYSE:LL), windows, air barrier systems, and waterproofing systems. So, a diversity of products that cater to home renovation projects is somewhat of a safety net for the company.

Home improvement projects

The company’s aggressiveness is also apparent with its recent acquisition announcement. It entered into an agreement with Orchard Supply Hardware Stores Corp (OTCMKTS:OSHWQ) (OSHWQ) to buy its majority assets. Lowe’s Companies, Inc. (NYSE:LOW) is paying $205 million in cash.

Orchard Supply Hardware Stores Corp (OTCMKTS:OSHWQ) is a local hardware store operator with all its outlets in California. Therefore, Lowe’s Companies, Inc. (NYSE:LOW) is further tapping the lucrative Golden State market. Investors should see that revenue and profit growth are what they are after on the West Coast, via community hardware and garden stores that concentrate on paint, repair, and the backyard.

My conclusion

Don’t let less than stellar performance numbers in any sector surprise you. You’re an investor — read the signs of the times and make informed investing decisions that sidestep unsubstantiated claims that things are much better than they really are. The three above mentioned companies can be part of a healthy portfolio that relies on remodeling…not the new homes market.

Michael Ugulini has no position in any stocks mentioned. The Motley Fool recommends Lowe’s and Lumber Liquidators. The Motley Fool owns shares of Lumber Liquidators. Michael is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article A Caveat for Investors: The Housing Market originally appeared on Fool.com is written by Michael Ugulini.

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