Homeowners Lock In Rates and Reinvest in Houses
Smaller companies are finding growth in home remodeling and long-term defense contracts as consumers avoid moving and the government secures nuclear platforms.
Coverage: 10 of 83 companies in this theme (TGLS, ALOY, KMX, ONDS, SLN, WLY, GHM, KROS, BV, RES) — a sample, not the full set.
Homeowners locked into low mortgage rates are choosing to reinvest in their current properties rather than moving, creating a surge in the repair and remodeling market. Tecnoglass (TGLS) reports that 70% of its single-family residential business now comes from this segment. While the core aluminum window market for single-family homes in Florida is remaining flattish or growing in the low single digits, Tecnoglass expects its overall residential segment to grow by double digits this year as it expands into Manhattan, Charleston, Houston, Phoenix, and Los Angeles.
This residential resilience is playing out against a backdrop of severe supply chain volatility. The US aluminum premium has surged over 350% year-on-year due to tariffs. Because the US can only supply roughly 40% of its own aluminum needs, the cost of domestic material has risen to the point where it is nearly indifferent whether to pay the tariff or buy locally. Tecnoglass raised prices by 7% in May 2026. This increase was on the lower end of the industry range of 6-12%, a strategic move to capture market share while competitors struggle with tariff-related cost spikes.
While some sectors see stability, the used vehicle market is facing a pricing squeeze. CarMax (KMX) saw comparable store used unit sales decline 0.8% in Q1 fiscal 2027. To drive volume, the company took pricing actions that reduced used vehicle gross profit per unit by $230 year-over-year to $2,177. CarMax expects margins to decline by another $200 per unit for the full fiscal year 2027 as it adopts a more dynamic approach to pricing and cuts logistics costs.
Consumer caution is also appearing in how vehicles are acquired and financed. Total vehicle purchases at CarMax declined 4.4% year-over-year, with a sharp 15.4% drop in vehicles purchased from dealers. Financing penetration through CarMax Auto Finance (CAF) also dipped to 43.3% from 44.4% the prior year, with Tier 2 penetration falling from 17.7% to 15.7%. This suggests a tightening of credit or a shift in buyer profiles that diverges from the more robust spending seen in home improvements.
In contrast to the volatility of consumer retail, industrial and defense firms are locking in decades of visibility. Graham Corporation (GHM) has a defense backlog providing a $1.8 billion revenue opportunity through 2056, tied to Navy nuclear programs including Virginia-class submarines and Ford-class carriers. Over 80% of Graham's defense revenue is sole-sourced. The company is also seeing a production ramp for its compact radar cooling pump, now a U.S. Army program of record with demand estimated at 8-12+ radars per year.
Knowledge and data services are similarly pivoting toward long-term, recurring AI models. John Wiley & Sons (WLY) reported AI license revenue of $49.1 million for fiscal year 2026, with Research AI licensing jumping to $33.1 million from approximately $11 million the prior year. This growth in AI and open access articles—which grew by 25%—is offsetting a 7% decline in Learning segment revenue caused by falling print book and retail sales.
Companies are aggressively consolidating to secure these proprietary data advantages. Wiley acquired Emerald Publishing for $452 million in June 2026 to strengthen its AI content moat. Similarly, Ondas (ONDS) is acquiring Cyberhawk for $125 million. Cyberhawk brings a $95 million backlog and a business model where 95% of revenue is recurring through multi-year contracts and subscriptions.
Across these sectors, the signal is a flight to stability. Whether it is the multi-decade certainty of nuclear submarine platforms or the shift toward recurring AI licenses and home remodeling, companies are finding success by anchoring themselves to assets and contracts that are insulated from short-term interest rate swings.