According to J.P. Morgan, stocks tied to new home construction are set to outperform those related to existing housing renovations. In a recent report, Michael Rehaut, an analyst specializing in home-building and building products, outlined the diverging performance of these two markets.

While the residential housing market is experiencing a rebound, repair and remodeling activity remains stagnant. Indicators, such as declining sales of existing single-family homes, suggest a decreased demand for renovations. In contrast, new single-family housing starts have been steady, averaging an annual rate of 1 million, which is close to historical averages.

Considering these dynamics, Rehaut downgraded Stanley Black & Decker from Hold to Sell. Conversely, he upgraded TopBuild and Installed Building Products from Hold to Buy.

Rehaut's price target for Stanley stock remained unchanged at $89 per share. In early trading, Stanley stock saw a 4.7% increase to $101.07 per share. Meanwhile, the S&P 500 and Dow Jones Industrial Average were both up around 0.4%.

Rehaut raised his price target for TopBuild from $312 to $387 per share, with the stock seeing an 8.1% increase to $359.47 per share. Additionally, his price target for Installed Building Products rose to $199 from $167, as the shares climbed 7.1% to $178.76.

Currently, less than 20% of analysts covering Stanley stock rate it as a Buy, while the average Buy-rating ratio for S&P 500 stocks is approximately 55%. The average analyst price target for Stanley stock is about $95 per share.

On the other hand, the Buy-rating ratios for TopBuild and Installed Building Products stand at 67% and 50% respectively. Analysts' average price targets for TopBuild and Installed Building Products are around $327 and $162 per share, respectively.

Notably, both price targets are below the current trading levels of the stocks. TopBuild stock has outperformed expectations, surging approximately 113% year-to-date, while Installed Building Products shares have gained about 95%.

Rehaut remains optimistic about the future performance of these stocks.

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