Why Masco Corporation (MAS) Is a Buy

NEW YORK (TheStreet) -- Signs the home improvement market is recovering restored investors' confidence in Masco Corporation (MAS). The company, which manufactures cabinetry, faucets and other construction supplies, surged 3.7% to $21.84 by midday.

On Wednesday, Jim Cramer and Stephanie Link added 1,500 shares of the company to their Action Alerts Plus portfolio, on the view the sector still has room to expand to its 2007 peak.

"The company's repair/remodeling exposure is what we are most excited about (it accounts for 73% of Masco's total sales exposure), and we see it continuing to be a big theme for 2014," wrote Cramer and Link in their report.

Year to date, Masco Corp has climbed 31.1%, leading the SPDR S&P Homebuilders index (XHB) which is up 17.96% for the year.

The home improvement industry has been buffeted by macroeconomic headwinds after the housing market crashed during the U.S. economic downturn. Over the third quarter, Lowe's (LOW) and Home Depot (HDreported a 6.2% and 7.4% increase in same-store sales, respectively, indicating a market recovery is well under way.

TheStreet Ratings team has reiterated its "buy" rating for Masco Corp with a ratings score of B-. The team has this to say about their recommendation:

"We rate Masco Corp (MAS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

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