We are less than two weeks away from the official start of the spring season. Canadian manufacturing was dealt good news on March 8, as the United States elected to exempt Canada and Mexico from steel and aluminum tariffs. The Bank of Canada cited trade concerns in its recent meeting when it held the benchmark rate at 1.25%. However, the central bank was also optimistic about domestic growth in 2018.
The spring and summer season often sees a ramping up in real estate activity as well as in the area of home improvement. Strong growth should propel consumers and interest rates remain quite low, even after an early hike in January. Today, we are going to look at three companies that could benefit from an improved domestic economy as well as a push to renovate in the warmer months.
Sleep Country Canada Holdings Inc. (TSX: ZZZ)
Sleep Country is a Brampton-based mattress retailer. Sleep Country stock has climbed 10.5% in 2018 as of close on March 8. The stock spiked after the company released its 2017 fourth-quarter and full-year results on March 1.
In the fourth quarter, gross profit jumped 19.6% to $46.7 million and made up 30.4% of revenue. Adjusted net income surged 34.8% year over year to $15.8 million, and the company opened three new stores in Q4. For the full year, Sleep Country saw gross profit rise 15.6% to $175 million and adjusted net income climbed 21.3% to $62 million. Sleep Country bumped up its spending on marketing in the latter half of 2017 and launched its e-commerce platform.
The company declared a dividend of $0.165 per share, representing a 1.8% dividend yield.
Richelieu Hardware Ltd. (TSX: RCH)
Richelieu is a Montreal-based company that distributes, imports, and manufactures specialty hardware and complementary products. Shares of Richelieu have declined 11.7% in 2018 thus far. The company released its fourth-quarter and full-year results for 2017 back in January.
In 2017, sales climbed 11.6% to $942.5 million and diluted net earnings per share rose 7.5% to $1.15. Sales jumped 20.6% in Canada with 11.2% coming from internal growth. Richelieu saw sales to hardware retailers and renovation superstores rise 17.5% year over year to $127.6 million. In the United States, sales increased 9.2% with sales at U.S. retailers and superstores up 1.8%.
Richelieu hiked its dividend 5.8% to $0.06 per share, representing a 0.8% dividend yield.
Leon’s Furniture Ltd. (TSX: LNF)
Leon’s is a Toronto-based home furnishing, mattress, appliances, and electronics retailer. Leon’s stock has dropped 6.7% in 2018 thus far. The company released its 2017 fourth-quarter and full-year results on February 22.
For the full year, total system-wide sales climbed 4.2% to $2.63 billion compared to $2.53 billion in 2016. Adjusted net income rose 14.1% to $99 million and adjusted EBITDA climbed 6% to $184.8 million. Leon’s also announced a quarterly dividend of $0.12 per share, representing a 2.8% dividend yield. The stock comes at a bargain after its steep dip to start 2018.
