Griffon Corporation GFF is well-positioned to benefit from strength in the Home and Building Products (HBP) and accretive acquisitions. The company’s commitment to reward its shareholders also bodes well.

Based in New York, NY, Griffon is a diversified holding company with exposure in several industries. The company engages in the manufacture and sale of a wide range of consumer and professional, and home and building products including garage doors, shutters, materials for disposable diapers and disposable health care products.

In the past six months, the company’s shares have gained 12.1% compared with the industry’s 0.7% growth.

Image Source: Zacks Investment Research

Let’s delve into the factors that make this Zacks Rank #1 (Strong Buy) company a smart investment choice at the moment.

Business Strength: Increased demand for residential products, supported by the resiliency of repair and remodeling activity in the residential construction market, is driving GFF’s HBP segment. The U.S. residential construction market is seeing a recovery in single-family housing, supported by lower interest rates and builder incentives, which is likely to be beneficial for the segment in the quarters ahead. The recovery in the commercial construction market, driven by several projects undertaken by customers, is also expected to benefit the segment.

Expansion Initiatives: The company solidified its product portfolio and leveraged business opportunities by adding assets. In July 2024, it acquired an Australia-based company, Pope (a provider of residential watering products), through its subsidiary, The AMES Companies, Inc. (AMES). Pope, which has been added to Griffon’s CPP segment, has expanded its product portfolio in the Australian market. The acquisition of Pope is anticipated to generate annual revenues of around $25 million and positively impact the company’s earnings in the first full year of ownership.

Investments: Griffon has been investing in productivity, innovation and capacity expansion to drive growth. In 2023, the company expanded Clopay’s Troy manufacturing facility, which will improve its manufacturing efficiencies and introduce new product lines. GFF also expanded its sectional door manufacturing capacity in Ohio to cater to the increasing demand for its premium products. These projects signify a significant investment in the expansion and modernization of the company’s key manufacturing and distribution facilities. Griffon plans to make additional investments in capacity expansion and technology in 2025.

Rewards to Shareholders: GFF is committed to returning value to shareholders through share repurchases and dividends. In the first quarter of fiscal 2025 (December 2024), it paid dividends worth $9 million and repurchased shares for $42.3 million. In November 2024, Griffon announced that the board of directors approved a new $400,000 share repurchase authorization. Also, in November 2024, the company hiked its quarterly dividend by 20%.