Lowe's (LOW) stock has meandered since the September 16, 2009 Buy rating at $21.60 per share, but I'm nevertheless reiterating my buy rating. Here's why:Lowe's has now posted three straight less-worse-than-expected quarterly earning performances, and the view from here argues that both home improvement revenue, and more broadly, U.S. home sales (new and existing) have bottomed, providing an adequate tailwind for the stock. Further, any higher-than-expected store traffic in 2010 will be a bonus. The First Call FY2009/FY2010 EPS estimates for LOW are $1.22 to $1.35.
Finally, technically Lowe's stock chart has that end-of-the-year biding-their-time look. Some institutional investors (IIs) are taking profits at year end, while others are adding to the positions modestly, with larger position buys likely in 2010. Hence, if one waits until the new year to buy LOW, that may be too late, as it may be up to $27 or $28 by then.
Stock Analysis: Lowe's is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 100% position in LOW's now. Sell/Stop Loss if you were to buy shares in this company: $14.50.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
11-24-2009 @ 5:49PM
Sheldon L said...
...and it is a duopoly with Home Depot + the dividends. This is a good bet along with "my pal Warren". In the midst of the bubble it was 60% higher. However, it is now trading at pre-bubble value. Moving half way back (+30%) gets you to the high 20's as Joe suggests.