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It is hard to believe, but slowly the housing market in the US is coming back. Homebuilder Toll Brothers (NYSE:TOL) just reported a strong quarter, saying "Housing recovery starting to roll." Years of pent up demand, low interest rates, and falling national unemployment will be a force in the market for the next half decade. Also of note, sales of distressed homes have skyrocketed in recent years, leading to a nationwide tsunami of home improvement; consuming mountains of tile, carpet, 2x4's, and paint.

Top housing recovery stocks to buy on dips:

Wells Fargo & Company (NYSE:WFC)

Wells Fargo is the fourth largest bank in the US by assets, second in deposits, and the leading originator of home mortgages for the last 3 years. Headquartered in San Francisco California, WFC has a fortress balance sheet with no trading mess in London, a major long-term holder in Warren Buffett, and pays investors a sizable and growing 2.83% dividend. Wells Fargo reported a decent Q1, profits topped estimates but could have been better. Honestly earnings growth is the real story here, the shares look to earn $3.27 for 2012, and $3.70 for the 2013 campaign; leaving the shares trading at 8.4x '13 earnings. Wells Fargo is superbly run, has a strong growth profile, and looks to take share from its stumbling rivals.

WFC SEC filings.

Home Depot, Inc. (NYSE:HD)

Home Depot is the leading home improvement superstore in the US, and as of late has been stealing valuable market share from arch-rival Lowes (NYSE:LOW). No national retail chain is better run than HD; earnings have been strong, and earnings growth looks to be almost 20% a year for the next 5 years. As the housing market continues to improve millions of homes will be repaired, re-floored, and updated. Other good news, Amazon.com (NASDAQ:AMZN) won't be selling 2x4's anytime soon, and Home Depot is on its game; reporting a strong Q1 earlier in the year. HD provides customers a valuable variety of products, a dividend of 2.42%, and is up 29.8% over the last 12 months; not bad.

HD SEC filings.

Sherwin-Williams Company (NYSE:SHW)

Sherwin Williams is a premier paint and coatings producer, making the company a great pure play on the coming multi-year housing recovery. Their Sherwin Williams Paints line is one of the top selling paints in North America, South America, and Europe. SHW had a great Q1, and shares currently trade at $119.80, 26x earnings. Coming earnings growth for SHW will be rapid, and with a market cap of only 12B there is a lot of room for growth going forward. The shares look to earn $6.18 in 2012, and a conservative $7.31 for 2013, leaving the company trading at 16.4x '13 earnings. SHW is my top pick of the three, but I'd like the stock to come down a little before adding to my position. The shares currently yield 1.3% and are trading higher by +1.2% on a day the S&P500 is off 12pts.

SWH SEC filings.

Risks:

As always Europe is driving the bus (markets). If Greece implodes, or Germany decides enough is enough, global markets will sell off, and go down hard. I look to buy that dip, and I recommend you do too.

Conclusion:

With strong earnings growth, and a housing super-trend on their side, WFC, HD, and SHW look well positioned to grow for years to come. The above companies are superbly run, high-quality, and best in class; a housing recovery will look favorably upon their share holders.

Always do your homework.

Source: The Housing Recovery Continues: 3 Top Stocks To Buy On Dips