4 Top Furniture Industry Stocks To Buy Amid Solid Housing & R&R Trend

Coronavirus-Induced Disruptions, Stiff Competition & Higher Costs: Industry participants have been bearing the brunt of coronavirus-induced disruptions that has hurt business activities, global supply chains, and international trade at large. Also, the furniture industry is highly competitive with home furnishing retailers, department stores, and antique dealers giving a hard time. Again, companies need to make incremental investments to address an expanding omnichannel environment as shoppers tend to look for online options. Growth in online sales will continue to dent traditional furniture retailers’ market share as brands such as Etsy, Things Remembered, Costco, and Amazon are finding their way into the market. Meanwhile, industry players are distressed by rising raw material prices, logistic expenses, and labor costs. Moreover, volatility in lumber prices is a key cause for concern.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Furniture industry is a seven-stock group within the broader Zacks Consumer Discretionary sector. The industry currently carries a Zacks Industry Rank #25, which places it at the top 10% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates lucrative near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential. Since October 2020, the industry’s earnings estimates for 2021 have been revised 2.1% upward.

Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Lags Sector & S&P 500

The Zacks Furniture industry has underperformed the broader Zacks Consumer Discretionary sector as well as the Zacks S&P 500 composite over the past year.

Over this period, the industry has gained 4.1% compared with the S&P 500’s increase of 16.4% and the broader sector’s 13.6% growth.

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