Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Retailers - Home Improvement Products & Services industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Retailers - Home Improvement Products & Services Stock News

Before choosing which top Retailers - Home Improvement Products & Services stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

There is a positive fundamental outlook for the home improvement retail industry. We have conviction this industry will benefit from a multiyear secular shift in consumer habits and spending that boosts home improvement retail demand. In 2021-2022, we forecast home improvement retailers will benefit from more of a stay-at-home lifestyle. Homeowners are pivoting with their discretionary spending to improve their homes, versus spending on restaurants, live entertainment, and family travel. This will also benefit contractors for home remodeling. Any economic slowdown could lead to lower sales for Home Depot and Lowe’s, but we see sustained growth for this industry. The U.S. household savings rate is at an all-time high while credit card balances are low. Whether it be federal fiscal stimulus checks, reduced conspicuous spending during the pandemic, or paying down outstanding credit balances, the consumer is healthy and poised to spend on the home in 2021-2022. U.S. household debt services payments are the best we have seen in over 30 years or since the peak in 2007. Wealth effect from higher home prices and the stock market bode well for home spending. Home prices are hitting records in just about every part of the country. The S&P CoreLogic Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices that track changes in the value of residential real estate. The June 29 release for the 20-City Composite reported a 14.9% increase Y/Y for April data, up from 13.4% in the previous month. Many home improvement retailers are shifting their capital spending to technology investments, improving existing stores, which could lead to higher returns on capital versus new stores, and launching new market delivery operations from stores. Home Depot and Lowe’s are beginning to understand how to integrate e-commerce with in-store purchases and delivery to job sites.

Why Focus on Undervalued Retailers - Home Improvement Products & Services Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Retailers - Home Improvement Products & Services Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Retailers - Home Improvement Products & Services industry for Wednesday, January 31, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Retailers - Home Improvement Products & Services industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

FGI Industries Ltd’s Value Grade

Value Grade:

FGI Industries Ltd. (FGI) is a supplier of bath and kitchen products. The Company offers a range of products under three categories, namely sanitaryware, bath furniture, and other. The Company?s product consists of sanitaryware, including primarily toilets, sinks, pedestals, and toilet seats; bath furniture, including vanities, mirrors and cabinets; shower systems, custom kitchen cabinetry, and other accessory items. These products are sold primarily for repair and remodeling (R&R;) activity and, new home or commercial construction. The Company sells its products through numerous partners, including mass retail centers, wholesale and commercial distributors, online retailers, and independent dealers and distributors. The Company's brands include Contrac, COVERED BRIDGE CABINETRY, CRAFT+MAIN, JETCOAT, avenue, contrac, and FGI.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

FGI Industries Ltd has a Value Score of 91, which is considered to be undervalued.

When you look at FGI Industries Ltd’s price-to-sales ratio at 0.12 compared to the industry median at 0.98, this company has a lower price relative to revenue compared to its peers. This could make FGI Industries Ltd’s stock more attractive for value investors.

FGI Industries Ltd’s price-earnings ratio is 16.49 compared to the industry median at 19.71. This means it has a lower share price relative to earnings compared to its peers. This could make FGI Industries Ltd more attractive for value investors.

Now, let’s assess FGI Industries Ltd’s EV/EBITDA ratio, also known as enterprise multiple. At 6.1, when compared to the industry median of 12.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. FGI Industries Ltd’s shareholder yield is higher than its industry median ratio of (0.22%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. FGI Industries Ltd’s price-to-book ratio is lower than its industry median ratio of 1.55. This could make FGI Industries Ltd more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at FGI Industries Ltd’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. FGI Industries Ltd’s price-to-free-cash-flow ratio is lower than its industry median ratio of 24.81. This could make FGI Industries Ltd more attractive because the lower P/FCF ratio indicates that FGI Industries Ltd is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

GrowGeneration Corp’s Value Grade

Value Grade:

GrowGeneration Corp. operates a chain of specialty retail hydroponic and organic garden centers in the United States and is a marketer and distributor of nutrients, growing media, lighting, ventilation systems and other products for hydroponic and organic gardening. The Company also engages in the distribution of private label products and commercial benching. The Company operates through three segments: Retail, E-Commerce and Distribution and other. It has over 60 retail locations across 16 states in the United States. It also operates an online superstore for cultivators at growgeneration.com, as well as a wholesale business for resellers, HRG Distribution and MMI. Its products include proprietary brands such as Ion Lighting, PowerSi monosilicic acid, Charcoir coco pots, cubes and medium, Drip Hydro liquid and powder nutrients, MMI Agriculture benching and racking, and Durabreeze fans, and others. It also provides facility design services to commercial growers.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

GrowGeneration Corp has a Value Score of 79, which is considered to be undervalued.

GrowGeneration Corp’s price-to-book ratio is higher than its peers. This could make GrowGeneration Corp less attractive for value investors when compared to the industry median at 1.55.

You can read more about GrowGeneration Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Tile Shop Holdings Inc’s Value Grade

Value Grade:

Tile Shop Holdings, Inc. is a specialty retailer of natural stone and man-made tiles, setting and maintenance materials, and related accessories in the United States. The Company offers an assortment of natural stone and man-made tile products. Its natural stone products include marble, travertine, granite, quartz, sandstone, slate, and onyx tiles. Its man-made products include ceramic, porcelain, glass, cement, wood look, metal and luxury vinyl tile. The Company?s assortment of accessories, including mosaics, pencils, listellos, and other products. It also offers a range of setting and maintenance materials, such as thinset, grout, sealers, and accessories, including installation tools, shower and bath shelves, drains, and similar products. It also offers customers delivery service through third-party freight providers. The Company sells its products under brand names, including Superior Adhesives & Chemicals, Superior Tools & Supplies, Rush River, and Fired Earth.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Tile Shop Holdings Inc has a Value Score of 75, which is considered to be undervalued.

Tile Shop Holdings Inc’s price-earnings ratio is 26.3 compared to the industry median at 19.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Tile Shop Holdings Inc less attractive for value investors.

Tile Shop Holdings Inc’s price-to-book ratio is lower than its peers. This could make Tile Shop Holdings Inc more attractive for value investors when compared to the industry median at 1.55.

You can read more about Tile Shop Holdings Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Retailers - Home Improvement Products & Services Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Retailers - Home Improvement Products & Services stocks as well as other industrys.

Choosing Which of the 3 Best Retailers - Home Improvement Products & Services Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• FGI Industries Ltd stock has a Value Grade of A.
• GrowGeneration Corp stock has a Value Grade of B.
• Tile Shop Holdings Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Retailers - Home Improvement Products & Services industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Retailers - Home Improvement Products & Services Stocks

Want to learn more about Retailers - Home Improvement Products & Services stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Retailers - Home Improvement Products & Services Stocks for Wednesday, January 31
• Why Tile Shop Holdings Inc’s (TTSH) Stock Is Down 4.40%
• Why Floor & Decor Holdings Inc’s (FND) Stock Is Down 6.54%
• Why Hillman Solutions Corp’s (HLMN) Stock Is Down 4.07%

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