House prices continue to rise in all major cities across Australia, as a culmination of ongoing low-interest rates, stable employment and a rising population adds to housing demand.

Companies like Boral Limited (ASX: BLD), Brickworks Limited (ASX: BKW) and James Hardie Industries Plc (ASX: JHX) are direct benefactors of this trend, with demand for raw building products growing as a result of the widespread construction boom.

Ancillary winners from the uplift in the housing market are retailers leveraged to housing products. Harvey Norman Holdings Limited (ASX: HVN), JB Hi Fi Limited (ASX: JBH) and Nick Scali Limited (ASX: NCK) fall into this category, with each seeing their respective share prices almost double since 2013.

A lesser known company which might also benefit from the boom is McPherson’s Ltd (ASX: MCP).

About McPherson’s

McPherson’s is a health, beauty, household and consumer durables conglomerate, owning licences to supply and distribute brands to various retail stores. The company currently operates three distinct segments of Home Appliances, Household Consumables and Impulse Merchandising.

In my view, the former two make McPherson’s an interesting prospect.

Home category

McPherson’s Home Appliances and Household Consumables divisions fall under the broader home segment, which collectively contributes 48% to group revenue. The segment boasts brands such as Multix (household consumables), Euromaid, IAG and Elica (home appliances), all of which are highly regarded in their respective categories. This positions McPherson’s to benefit from housing construction demand (as more consumers will be looking for these products).

Recent divestment

In 2016, McPherson’s divested its Housewares joint venture with Germany-based Fackelmann group to reduce debt by $20 million. Although the divestment meant a loss of distribution rights over industry leading homeware brands Wilstshire, Stanley Rogers, Furi and Luigi Bormioli, I believe McPherson’s is better placed as a result.

The reduction in debt strengthened McPherson’s balance sheet allowing it to maintain its fully-franked dividend of 8 cents per annum, placing it on a solid 12.6% trailing yield (after tax).

Other divisions

Impressively, investors in McPherson’s are provided with diversification through its health and beauty arm. Unlike traditional retailers Harvey Norman and JB Hi Fi, McPherson’s health and beauty division is distinct from housing and derives approximately 48% of its revenue. This makes McPherson’s less risky in my opinion.

The group owns rights to distribute Gucci, Dolce&Gabbana and Hugo Boss fragrances, adding to its repertoire of coveted brand names. Its other brands in this division include Moosehead, Swisspers, Dr LeWinn’s and Lady Jane which are all well regarded in their respective product categories.

Foolish takeaway

McPherson’s is by no means a Myer Holdings Ltd (ASX: MYR) or David Jones, given its success relies heavily upon pricing power against retailers. Nevertheless, I believe its current share price underestimates the group’s ability to benefit from the tailwinds of the housing boom (through its home division), making it one stock to buy today!

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Motley Fool contributor Rachit Dudhwala has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.