Yesterday’s Daily Alert recommended taking some profits on top-performing Top Pick for 2012 Lennar Corp. (LEN). Today’s recommendation is another play on the resurgent housing industry, from Blue Chip Growth Letter Editor Louis Navellier. The stock has already had a good run, but Navellier thinks there could definitely be more gas in the tank.
“After the latest batch of positive housing data there’s no doubt about it: the housing market recovery is the next thing to hit Wall Street. And my [new] recommendation is a somewhat creative play on this trend: Sherwin-Williams Company (SHW, $148), which operates 4,000 stores and facilities worldwide.
“Sherwin Williams’ paint has been all but flying off the shelves, and that’s because more foreclosed homes are being sold and cleaned up by their new owners. After all, one of easiest (and cheapest) ways to spruce up a home is a fresh coat of paint, so it’s no mystery why Sherwin Williams’ Paint Stores Group posted a 15% just in sales last quarter.
“While the Paint Stores segment accounts for three quarters of total income, Sherwin-Williams also sells a wide range of protective finishes for applications in the marine, automotive, architectural and aerospace industries. And considering that U.S. auto production is on the rise as well as jet deliveries, Sherwin-Williams should profit even outside of the housing market. Specifically, the analyst community forecasts 7.1% sales growth and 28.7% earnings growth this quarter. And it certainly doesn’t hurt that SHW’s 1.1% annual dividend yield is the industry’s sixth highest (out of 195 companies). On top of this, the company has steadily increased its dividend payment every year since 1979! ... Sherwin-Williams is a well-diversified alternative play on the housing recovery. Be sure to add shares of this Conservative stock under $156.”
- Louis Navellier, Blue Chip Growth Letter, October 2012