Floor & Decor Holdings (FND 2.58%), if only because it might be a classic Berkshire Hathaway stock, is one of the more interesting prospects in Warren Buffett’s portfolio. It has the long-term product appeal that attracted Buffett as a hard flooring vendor. However, at a somewhat greater price tag, it would appeal to his more risk-tolerant lieutenants.
Floor & Decor, on the other hand, appears to be a rising force in the home remodeling industry. Its current size, addressable market, and rapid expansion suggest it will benefit investors over time.
Warren Buffett and Floor & Decor
Berkshire Hathaway disclosed its position in the 13-F filing for the third quarter of 2021. At that moment, Berkshire owned about 817,000 shares. That holding increased gradually throughout Q4 and reached almost 4.8 million shares by the first quarter of 2022.
The significant Q1 increase in shares may have been influenced by the plummeting stock price. In that quarter, the stock fell 38% due to the bear market. Furthermore, as it sells at a 45 percent discount to its January 2022 opening price, the fall has continued.
Buffett’s team just invested in a number of firms, yet the firm’s position in the market might make Floor & Decor one of Buffett’s most successful investments. Indeed, whilst it competes with major home renovation chains such as Lowe’s, Home Depot, and many small independents, it is up against some significant players.
Still, because it specializes in hard flooring, Floor & Decor may provide a wider range of alternatives than its large rivals. Additionally, its size allows for bulk purchases that independent flooring stores may find difficult to match.
Its success in the market is indicative of its potential. It has operations in 34 states, making it almost a national business. However, with only 166 outlets in Q1, achieving its objective of 500 stores over the next few years will take some time. Its presence is also significantly smaller than that of Home Depot, which has over 2,300 locations.
Consider Floor & Decor stock
Buffett’s crew seems to have discovered a pearl in the mire with Floor & Decor. Obviously, worries about a recession and rising expenses have affected the stock.
Nonetheless, it continues to register double-digit sales growth in the face of strong competitive and economic pressures. Given the number of stores compared to Home Depot, the retail stock could considerably benefit investors as Floor & Decor expands and broadens its nationwide presence.