Quant Picks: Home Improvement Retailers to Add to Your Portfolio

With home-owners spending a lot of money on upgrading their houses, home-improvement sales are going up. Home Depot has been having a great year. The company's earnings from its second quarter went up 9%. Sales from Home Depot stores open more than a year have gone up over 4%, and growth in the U.S. has gone up nearly 6%. But not all home improvement retailers are doing as well as Home Depot. After a 60 Minutes report that claimed Lumber Liquidators Holdings was using toxic levels of formaldehyde in its flooring, the stock plummeted and has dropped nearly 80% year-to-date. Here are some of the best home improvement retail stocks you should consider buying -- and ones you should avoid at all costs, according to TheStreet Quant Ratings. Number 5 is Sears Hometown and Outlet Stores. This is a 'sell.' With a 'D-' rating, the company's flaws can be seen in its disappointing return on equity and poor profit margins. 4th is, Lumber Liquidators Holdings. This is also a 'sell.' With a 'D' rating, Lumber Liquidators weaknesses are in its deteriorating net income and disappointing return on equity. 3rd is Tile Shop Holdings. Our algorithm says this company is a 'hold.' With a 'C-' rating Tile Shop's strengths are in its revenue growth and increase in net income. 2nd is Lowe's Companies. This is a 'buy.' With an 'A' rating, the company thrives in its increase in net income and revenue growth. Number 1 is Home Depot. This is also a 'buy.' With an 'A+' rating, the company flourishes in its solid stock price performance and notable return on equity. TheStreet Ratings are algorithmic stock picks based on 32 major data points. S&P 500 stocks rated 'buy' yielded a 16-and-a-half-percent return in 2014, beating the S&P 500 Total Return Index by more than 300 basis points.