A customer pays for his purchases inside a Lowe’s store in Cary, North Carolina.
Jim R. Bounds | Bloomberg | Getty Images
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Americans are spending more time at home amid the coronavirus crisis, and few retailers are poised to benefit, according to Bank of America.
The firm said consumers are pouring more money into their homes through home improvement and furnishings.
“Although we expect some near-term deceleration as parts of the population go back to their places of business and spend less time at home, COVID-19 could provide a longer-term benefit for home improvement stocks if it ultimately does cause an increase in housing turnover as our survey may suggest,” analyst Elizabeth Suzuki told clients.
With millions of Americans trapped at home during quarantines, consumers are spending money on improving the quality and comfort of their homes. Bank of America’s survey found that over 70% of respondents have taken on home improvement projects during the outbreak of pandemic and plan to do more in the next year.
This trend favors home improvement stocks, particularly those skewed for do-it-yourself customers, like Lowe’s and Tractor Supply. Bank of America raised it price target on Lowe’s to $160 per share from $150 per share and hiked its target on Tractor Supply to $140 per share from $134 per share. The firm has a buy rating on both stocks.
“Home improvement spending by Millennials (Gen Y) has outpaced that of other generations,” Suzuki wrote. “The long-term tailwind of Millennials buying older homes and fixing them up is part of our view that home improvement spending has several years of growth before the next cyclical contraction.”
Take a look at the other buy-rated retailers that Bank of America said will benefit from the new stay-at-home trends.