The Home Depot, Inc. (HD), Lowe’s Companies, Inc. (LOW), Sherwin-Williams Company (SHW): Which of These 3 Companies Is Best Positioned to Profit From Housing?

Even though net earnings were $540 million, an increase of 2.5% from last year, revenue is the major indicator right now. With so many more people looking to renovate, it is the company’s ability to attract people to its store over the competition that will determine the victor. Furthermore, with many renovators looking to improve their homes right now, the months and years ahead could decide the long-term future of these companies as they try to build customer loyalty.

Customer experience at The Home Depot, Inc. (NYSE:HD), which prides itself on a knowledgeable staff which can help individuals with their projects, has been positive over the years and has led the company to massive growth. The business has retained its clients from past years and that is the likely reason for decreased sales at Lowe’s Companies, Inc. (NYSE:LOW), even during this housing recovery.

An argument for Sherwin-Williams

Home prices are near their pre-recession levels, and this has caused companies like Fortune Brands Home & Security Inc (NYSE:FBHS) to rise by over 75%. Similarly, Sherwin-Williams Company (NYSE:SHW), which accrues revenue from residential and commercial renovation projects, increased in price from around $75, in 2011, to over $180 today. Even though the share price has experienced substantial growth since 2011, it has only risen 35% since 2010.

Homeowners who had put off costly renovations during the recession will now turn to companies such as Sherwin-Williams Company (NYSE:SHW) to complete their projects. While those looking to renovate have several options for materials suppliers, Sherwin-Williams Company (NYSE:SHW) has showed a sign of confidence recently by increasing its dividend by 7%. Still, my money would be on Home Depot because of its customer service and many locations.

Playing the momentum

Investing in these companies would be a momentum play, one that is relatively risky due to the potential for investors to be overly optimistic. However, while prices may dip, and they have since the release of April’s data last month, betting on the full recovery of the housing sector is a smart long-term play. Count on The Home Depot, Inc. (NYSE:HD) to come out on top.

Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Home Depot, Lowe’s, and Sherwin-Williams.

The article Which of These 3 Companies Is Best Positioned to Profit From Housing? originally appeared on Fool.com.

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