Griffon, AZEK, and Masco among Baird’s top residential construction stocks

Residential construction projects were up 11% month-over-month in February to 1.5M, the largest sequential improvement since last May, according to a Baird report, using data from the Census Bureau.

Housing starts and permits outperformed expectations, led by strength in single-family homes. This year is on pace for 1.62M starts, up 14% compared to last year.

Baird’s Equity Research team said they prefer residential stocks with company-specific drivers and catalysts.

These are Baird’s best residential ideas, with analysts’ views:

• Griffon Corp. (NYSE:GFF) - R&R (remove and replace) exposure, and attractive SOTP (sum of the parts) valuation.
• Masco Corp. (NYSE:MAS) - Re-rating potential, margin expansion, resilience of portfolio.
• The AZEK Co. (NYSE:AZEK) - Secular growth, and margin opportunities.

Analysts also like:

• American Woodmark Corp. (AMWD) - Share gains, and improved execution of the company.
• Tecnoglass Inc. (TGLS) - Profitable share gains.
• Simpson Manufacturing Co. (SSD) - ROIC, long-term earnings power.
• Techtronic Industries Co. (OTCQX:TTNDY) - Cordless penetration, share gains, and margin expansion.