In what analysts have dubbed the “stay-at-home economy,” more consumers are choosing to spend their free time in their homes.
Instead of going out to live entertainment events, people can find an endless supply of media content on their own devices. Instead of eating out at restaurants, they are turning to delivery services with an expanding array of choices, from restaurant meals to prepare-it-yourself kits. And spending more time inside the home inspires more remodeling and renovation projects.
Here are four stocks already benefiting from consumers spending more time in their homes:
Grubhub Soars with Food Delivery Demand
People who love staying home also love getting food brought to their doorstep. As a result, delivery services are seeing significantly increased interest. Among them is Grubhub Inc. (GRUB), with shares soaring more than 19% in Thursday’s session on its impressive first-quarter earnings. The New York-based pickup and delivery service provider reported revenue of $156.1 million, up 39 percent from a year prior. Non-GAAP net income was $25.1 million, or 29 cents per share, up 46 percent from the previous year and above the Street view of 24 cents a share.
“More new diners tried Grubhub than ever before in the first quarter. We are seeing clear signs of success from a more diverse restaurant base, broader marketing reach, and continuous improvement of our product,” Grubhub CEO Matt Maloney said in a statement. “Delivery has enabled our restaurant network to grow significantly in both breadth and depth.”
Grubhub shares are up 56.7 percent the past year, and up 10.5 percent year to date.
Netflix Streaming Service Still in Growing Demand
Up 66.7 percent the past year, Netflix Inc. (NFLX) shares show no signs of slowing as more people are eschewing a night at the movie theatre for the comfort of watching movies from their couch.
The streaming service reported first-quarter streaming revenue on April 17 that surpassed $2.5 billion as it added 5 million members. Earnings were 40 cents per share versus the Street view of 37 cents per share, and up from 6 cents a year prior. Netflix’s revenue of $2.76 billion was on par with analysts’ expectations and well above 2016 first-quarter revenue of $1.96 billion.
“The opportunity provided to us by the growth of global internet is gigantic, and our plan is to keep investing as we increase membership, revenue and operating margins,” Netflix said in an April 17 letter to shareholders. (See also: China Licensing Deal Helps Netflix Breakout.)
2 Home Improvement Stocks to Watch
Both Sherwin-Williams Co. (SHW) and Home Depot Inc. (HD), with their remodeling and home improvement products, are well positioned to get a boost from a stay-at-home economy as consumers want to improve the space they are spending more time in.
Sherwin-Williams reported first-quarter net sales April 20 that increased 7.3 percent in the quarter to $2.76 billion, a record as it opened 10 new stores at a time when many retailers are announcing closings. The company’s stock is up more than 11 percent the past year, and up more than 24 percent year to date. (See also: Cowen Report: Retailers Need to Step Up Closings.)
Simliarly, home improvements retailer Home Depot is seeing substantial positive momentum. The Atlanta-based chain reported fourth-quarter revenue on Feb. 21 of $22.2 billion, up 5.8 percent from the year prior. Same-store sales also rose 5.8 percent. Net earnings were $1.44 per share, up from $1.17 per share in the same quarter the prior year. Home Depot is scheduled to report first-quarter earnings on May 16. (See also: Evaluating Home Depot and Lowes Ahead of Building Season.)
“Our focus on providing localized and innovative product selection, improving the interconnected customer experience, and driving productivity resulted in record sales and net earnings for 2016,” Craig Menear, chairman, CEO and president, said in a statement. “Our associates responded to a healthy housing market and strong customer demand.”
Home Depot shares are up 13.9 percent the past year, and up 15.3 percent year to date.