The stay-at-home trade is surging.
Stocks that stand to benefit from people increasingly staying at home — names such as Wayfair, Best Buy, Home Depot and relative newcomer Peloton — have soared in the last three months. As of Thursday morning,
- Wayfair is up 115%
- Peloton is up 115%
- Bed Bath & Beyond is up 111%
- Etsy is up 68%
- Lowe's is up 57%
- Best Buy is up 39%
- Home Depot is up 32%
- Sherwin-Williams is up 25%
The moves probably mean consumers are deciding the transform their homes into ideal "staycation" spots, Mark Tepper, president and CEO of Strategic Wealth Partners, told CNBC's "Trading Nation" on Wednesday.
"I think we're entering the staycation era," he said, calling the trend a "permanent shift." "Consumers around the country are pulling forward years of vacation expenses and they're turning their homes into their own little private resorts, from landscaping to patios to pools."
Tepper cited some anecdotal data from his home city of Cleveland to support his point.
"If you want a pool, you're now on a waiting list for 2021, for next year. You want a contractor to install an electrical outlet? Those are booking three months out. So, a lot of this stuff you've got to DIY [do it yourself]," he said.
These staycation transformations are likely driving the gains in stocks such as Home Depot and Peloton, Tepper said.
"When you think of Peloton, you think of the bike, but it's really much more than that. They've created a lifestyle app where you have the bike, the treadmill, but also yoga and meditation, things where you don't need the equipment," he said. "When it comes to Home Depot, that's one of the few retailers that has really taken off as a result of Covid-19. The stores are just packed shoulder to shoulder. People are really interested in making their house a place that they want to spend a lot of time at and it totally makes sense to me."
JC O'Hara, chief market technician at MKM Partners, agreed with Tepper on one of his picks.
"A lot of these stocks ... have already benefited handsomely from these trends and they're actually becoming pretty stretched," O'Hara said in the same "Trading Nation" interview. "Their charts are extended, so, the risk now is buying some of these stocks and … chasing momentum."
Home Depot was one of the few that looked like it still had room to run, O'Hara said.
"Technically, it's not extended, and in our opinion, it's just starting to break out," he said, pointing to the chart.
"We could see Home Depot reclaimed those pre-Covid February highs early in June and then it consolidated over the last few weeks. That consolidation has allowed our technical indicators to reset out of overbought," O'Hara said.
What makes Home Depot's setup even more bullish is that the consolidation was "more of a pause" than an outright pullback, O'Hara added.
"That confirmed to us that Home Depot was in strong hands," he said. "Technically, I think it's at a great buy point right here. From a technical perspective, we could set a price target at $290 and that's roughly 10% higher from here. So, we like the chart, we like the pause, we think it's going to regain momentum and I think it's a great entry spot right here."
Home Depot climbed less than half of 1% to around $266 after hitting a new all-time high early on Thursday.
Disclosure: CNBC parent Comcast-NBCUniversal is an investor in Peloton.
