Hello and welcome to Stock Monster! If you’re new here, add your email below to ensure that you receive my next emails in your inbox, and if you want to read more of our posts, check them out here.

What to expect (Apr. 1)

• 🏠 Why this retailer is betting big on housing & how you can too

• Monday’s Monster Pick - Fiji based gold 🐲

• ⛏️ Latest Mining/Exploration News

Last Thursday, Home Depot (NYSE: HD) announced its acquisition of SRS Distribution for $18.25 billion - read the official news here.

SRS Distribution is the fastest growing distributor of building products in the United States across several verticals including roofing, landscaping and pool contracting.

What does this say to the world?

Home Depot is betting on the growth of housing market - and not just a small bet, this is their largest acquisition ever.

They’re not betting on the DIY movement or small home renovations really, they think the US & Canada are going to need new houses, and a lot of them.

One thing to know about Home Depot, they’re usually right.

And their stock proves it, up 89% over 5 years.

The acquisition, which aims to close by the end of 2024, is a sign that something is coming in new construction and large-scale renovation projects.

SRS Distribution is a huge player in the distribution of roofing, landscaping, pool contracting and other building materials and brings to Home Depot a network of 760 locations across 47 states, and a fleet of over 4,000 delivery trucks​.

Home Depot is focusing on professional contractors, builders, and specialty trades, a sector that’s crucial in determining the pace and scale of nationwide projects.

It’s a bet on the resurgence of the housing market, something that has slowed the past few years.

The Bet

The past couple of years have seen a dramatic fluctuation in mortgage rates, with Canada seeing the largest rate of increase ever.

High mortgage rates have historically cooled down the market, making it more challenging for buyers to afford new home which leads to a decrease in new home construction.

As rates begin to stabilize or even decrease, the housing market is expected to experience a resurgence.

Home depot’s acquisition is no doubt a smart one given the conditions, but it should also serve as a lesson for investors.

Real estate is usually a good investment but they key is time.

Not waiting for the right time, but maximizing your time. Getting in early is the key to success in real estate. ‘Timing the market’ is not.

How to invest alongside $HD?

Of course buying a home or condo is a simple way to invest in real estate, but not everyone can drop the tens of thousands needed for a down payment - so how can you mirror Home Depot and invest in the upcoming housing boom?

REITS

For those looking for exposure to real estate without direct ownership, REITs (Real Estate Investment Trusts) are a good option.

These trusts invest in real estate assets, allowing investors to earn dividends from real estate investments actually buying the properties.

REITs invest in housing, apartment buildings, data centers, hotels, medical facilities, offices, retail centers, and warehouses. By investing in REITs, you’re mirroring the type of growth Home Depot expects.

The moment interest rates get cut, the housing market will go 🚀🚀🚀.

Don’t get caught on the sidelines.

Look into direct real estate opportunities, explore REITs, or look at alternatative real estate investment platforms like Addy, which allows you to invest in real estate for as little as $1. Click here to sign up and get $25.

Am I saying go out and buy 30 rental properties and become a landlord? No.

But some quick math makes everything a little bit more obvious.

Let’s say you have $50k.

Option 1 is putting the $50k into the S&P500, make 10%/year. After 10 years, you have $129,687.12, an increase of ~$80k, not bad.

Option 2, you buy a $500,000 home with the $50k. Each year, the value of your home goes up 3% (estimate). This would value you’re home at $671,958.19 after 10 years, an increase of over $171k. Plus, you’ve built equity in that home over the 10 years, putting your total ‘profit’ up over $200k in the same 10 year period.

That’s what I like to call leverage.

We sometimes second guess ourselves and worry about making the wrong decision, and while as investors and humans we should be cautious, the biggest regret is typically the thing we didn’t do.

Investing is about time in the market, not timing the market.

There’s been more millionaires made from real estate than any other investment class - why reinvent the wheel?

👋 Colton, Stock Monster.

Do you want to support Stock Monster? Buy me a coffee

If you liked this, make sure to Subscribe and if you want to read my other posts, check them out here.

This newsletter is for informational purposes only and should not be considered financial advice. Always conduct your own research before making any investment decisions. We have not been compensated in any way for this pick or content; we genuinely just like it. Assume that contributors to articles own or have interest in stocks they talk about, therefore may be biased.