© Reuters. Home Depot vs. Tile Shop Holdings: Which Home Improvement Stock is a Better Buy?

The DIY home improvement market achieved substantial growth last year in large measure because people were compelled to stay at home due to the pandemic restrictions. Now, as pandemic restrictions are removed and the economy gradually returns to health, and housing projects resume, we think home improvement stocks Home Depot (NYSE:) and Tile Shop Holdings (NASDAQ:) should benefit. But which of these stocks is a better choice now? Read more to find out.The Home Depot, Inc. (HD), which is based in Atlanta, Ga., operates as a home improvement retailer, selling various building materials, home improvement products, lawn and garden products, and décor products. It is the biggest home improvement company in the world. In comparison, Tile Shop Holdings, Inc. (TTSH) operates as a specialty retailer of natural stone and synthetic tiles, setting and maintenance materials, and related accessories. TTSH is based in Plymouth, Minn.

Last year, the home improvement industry achieved robust growth driven primarily by DIY projects. The Home Improvement Research Institute expects the industry’s growth to continue as contractor-led projects and projects once on hold resume. The total building products market is projected to grow by 13% in 2021, with the consumer market growing by 10.8% and the professional market growing by 18.2%. Moreover, the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University projects annual improvement and repair spending to register 9% growth in the current quarter, maintaining that pace into 2022. Both HD and TTSH should benefit from the increased spending on home improvement and remodeling trends.

TTSH’s stock has gained 23.7% in price over the past six months, while HD has returned 8.7%. In terms of the past year’s performance, TTSH is the winner with 117.4% gains versus HD’s 29.7%. Also, TTSH’s 98.2% gains year-to-date compare with HD’s 38.8% returns.

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