Loop Capital Recommends Investing in this ‘Stealth’ Home Improvement Stock

Investing in Home Improvement Stocks: Best Buy as an Under-the-Radar Pick

When people think of home improvement stocks, Best Buy may not be the first company that comes to mind. However, Loop Capital managing director Anthony Chukumba sees Best Buy as a potential hidden gem in the housing market. With a buy rating on Best Buy, Chukumba believes the electronics retailer could be a “stealth housing play” as the housing market continues to improve.

One key factor driving Chukumba’s optimism is the company’s sales of home appliances and TVs, which can benefit from an uptick in renovations and upgrades. Data indicating improved turnover in both new and existing housing units further supports Chukumba’s bullish outlook. He also anticipates a potential boost in sales as mortgage rates begin to fall.

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In a recent note to clients, Chukumba highlighted the strength in the labor market and the emergence of “green shoots” in the housing market. He sees Best Buy as an attractive investment opportunity, describing it as a “derivative play” on improved home sales due to its appliance and television businesses and relatively low valuation compared to other home furnishing retailers.

While Chukumba acknowledges that companies like Floor & Decor, RH, and Williams-Sonoma will also benefit from a stronger housing market, he believes that the potential upside is already priced into their stocks. In contrast, Best Buy currently trades at a lower valuation, making it an appealing option for investors.

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Despite facing challenges this year with a slight decline in share price and the announcement of impending layoffs, Loop Capital has set a price target of $93 for Best Buy. This target implies a roughly 20% upside from the current price, signaling confidence in the company’s long-term potential in the evolving housing market.

As the housing market continues to show signs of improvement, investors may want to consider Best Buy as a strategic investment choice in the home improvement sector.

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