TRG | The Bottom Line – 7/10

TRG | When Housing Recovers, Who Wins Most? – Overall View on Housing & Breaking Out Players Within This – As for housing market, we continue to look for signals amongst the noise. The signals, overall, are that a recovery is not on the horizon. Instead, we see sluggishness as here to stay. We have shared our view that housing, particularly R&R, has been in a recession (broadly speaking) the past few years. We believe conditions for growth are not yet present (right mix of affordability, homes for sales, big-ticket R&R spending, etc.). Behind this present reality, we still the view the long-term fundamentals as sound (e.g, a housing shortage + a rising number of homes that are decades old). When the conditions improve and volumes across the housing marketplace grow again, we believe this will be a tide to lifts all boats (building products, homebuilders, distributors, etc.). Some companies have proved fairly resilient in 2022-25 (FERG, FBIN, MAS, OC, NX, HNI, TREX). These companies have executed well in maintaining market share, pricing gains to help offset lower volumes, product development, and higher-end consumers helping to support sales. Some companies have seen results hit harder, but they could potentially see results boom upwards in a recovery (BLDR, JELD, LPX, MBC, UHAL). We focus more on these names in this note. On slide 4 -5 we compare TRG’s names to big box and homebuilder stocks.

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