The death of the stay-at-home trade has been greatly exaggerated.

Vaccines and declining COVID-19 infection rates in the U.S. were supposed to spell doom for last year’s best performing stocks amid a rotation into companies poised to benefit from the return to life as usual. While that’s played out for much of the group, the opposite is happening in some corners of the market.

Shares of furniture makers, home-improvement retailers and outdoor recreation companies continue to soar to new heights with few signs that the surge in demand that propelled sales over the past year is abating. RH, the purveyor of US$4,000 couches, has jumped 54 per cent this year. RV retailer Camping World Holdings Inc. is up 65 per cent.

The reasons why were on full display this week as first-quarter financial results poured in. Swimming pool supplies company Pool Corp. and rural lifestyle retailer Tractor Supply Co. were among companies that smashed Wall Street estimates. Both cited growing demand fueled by behavioral changes related to the virus as well as government stimulus, prompting higher forecasts for the rest of the year.

“Our customer base is experiencing robust, broad-based shopping patterns that provide significant opportunities for growth,” Hal Lawton, chief executive officer of Tractor Supply, said on the company’s earnings call. “These types of trends can simply be described as once-in-a-generation.”

Millions of vaccine doses delivered in the U.S. were supposed to unleash a wave of pent-up demand at places like movie theaters and gyms that were hard -- if not impossible -- to access last year. While that’s been true in many cases, habits formed during the peak of the crisis are proving to be longer lasting than many had anticipated.

The other big factor is a red-hot housing market helped by low mortgage rates and a relocation from cities to suburbs. That continues to drive demand for everything from home furnishings to materials needed for construction and remodeling.

The trends behind most of these stock rallies are likely to continue well into 2022, according to Cristina Fernandez, an analyst with Telsey Advisory Group. She expects strong results from Home Depot Inc. and Lowe’s Cos Inc. in coming quarters thanks to pent-up demand from do-it-yourself customers and professional services.

Spending Habits

Of course, many of last year’s biggest winners have lost billions in market value this year as investors brace for slower growth. Netflix Inc. showed this week that huge subscriber gains clocked in 2020 are proving difficult to maintain. The stock sank 7 per cent on Wednesday after reporting about 4 million new subscribers in the first quarter, the weakest start to a year since 2013. The stock is now trading around the level it was in July.

Netflix’s results were seen as a potential harbinger of similar results for others like Peloton Interactive Inc., whose 13 per cent decline this week was its worst since February. After gaining more than five-fold in 2020, the maker of stationary bikes and treadmills has tumbled 33 per cent this year. Amazon.com Inc. results on Thursday will be closely watched for signs of slowing growth in e-commerce and web services sales.

With Americans’ savings still flush from missed spending opportunities and stimulus, the near-term leadership of the stock market may very well be determined by where they choose to spend it. Goldman Sachs strategists including Arjun Menon and David Kostin raised their recommendation on consumer-discretionary stocks to “overweight” in a note on Thursday as excess savings meet the continued reopening of the economy. They expect the group will experience the largest positive earnings revisions of any sector.