Wall St. sees new investing in the home

Updated at 4:44 p.m. ET

 

Stocks associated with homebuying or home improvement are having a great month -- and year.

Which means that the investors buying the stocks are as smart as can be -- or setting themselves up for big losses if the stock market pulls back.

Whirlpool (WHR), up 10% to $112.42, was today best performer among stocks in the Standard & Poor's Index ($INX) because it reported a big gain in revenue and profit and guided substantially higher.

The company now sees full-year 2010 U.S. industry unit shipments up 3% to 5%, up from its prior outlook of a 2% to 4% rise.

Whirlpool is not alone. The MSCI U.S. Real Estate Investment Trust Index (RMZ.X) was up 0.8% today to 731 and up 19% on the year.

The Morgan Stanley Cyclical Index ($CYC.X) was up 0.7% today, led by Whirlpool, and is up 17.8% this year.

Home Depot (HD) was up 0.3% to $36.49 and is up 13.7% in April and 27% on the year.

The homebuilders, object of scorn, have been moving smartly higher. The Standard & Poor's Home Builders exchange-traded fund (XHB) is up 31% this year. And volume in the ETF is rising.

Maybe it has to do with the expiration of the first-time and move-up buyer tax credits next week. Maybe it's because investors are looking at current mortgage rates and now believe they will remain lower for a while.

Or maybe it's because investors are starting to get their arms around the idea that a recovery has begun.

Whirlpool's results came just days after data showed new orders for durable U.S. manufactured goods, excluding transportation, posted their largest gain in more than two years in March.

Bankrate.com's daily survey of mortgage rates had the 30-year mortgage rate at 5.17% today, up slightly from a week ago and DOWN from about 5.25% in early March when there was a bit of a scare about rising interest rates.

Lots of people believe the idea of a housing recovery is preposterous for two reasons:

• The tax credits are about to expire. Sales will probably fall off. The credits are a big reason why existing- and new-home sales showed gains in March.
  

• The huge inventories of foreclosed homes that banks and other lenders unhappily own.

These are undoubtedly good reasons. The Cash for Clunkers program last year sucked sales into July and August. Sales fell substantially in September but have moved higher since October. (We'll get another look on May 1.)

There are signs of people wandering back into home-improvement centers. Home Depot and Lowe's haven't said much on the topic since reporting fiscal-fourth quarter earnings.

But Tractor Supply (TSCO), which operates about 930 farm-and-ranch stores in 44 states, recently raised its sales and earnings guidance for the year based on strong results as the spring selling season opened. Shares were up 0.6% today and are up 33.6% this year.

And La-Z-Boy (LZB), maker of recliner chairs and other furniture, said it was seeing some modest traffic and sales gains in its stores. The stock is up 52% this year.

Sealy (ZZ), maker of Sealy, Posturepedic and Stearns & Foster bedding products, has seen its shares jump 28% this year -- albeit off a very low base. But the company said on March 31 it's seeing stabilizing retail demand.