Technical Research on Lowe's and Home Depot: Where is the Home Improvement Heading this Year?

Tue Jan 22, 2013 8:04am EST

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Technical Research on Lowe's and Home Depot: Where is the Home Improvement Heading this
Year?

LONDON, January 22, 2013 /PRNewswire/ --

    The retail sector has been one of the biggest victims of the ongoing economic crisis
and specialty retail stores had to bear the brunt of the real estate bubble as well.
However, along with the economy and housing, specialty home improvement stores are also
looking to get back on track. StockCall has completed the first round of technical and
charting analysis on Lowe's Companies Inc. (NYSE : LOW) and The Home Depot Inc. (NYSE :
HD). These free reports are accessible at http://www.stockcall.com/signup  

    In the past one year, major home improvement retail store chains like The Home Depot
Inc. and Lowe's Companies Inc. have not only provided good stock returns but are also
boosting their operations as well. These stocks have definitely benefited from the fact
that sale numbers for existing U.S. houses are now at a three-year high mark. Higher
sales will lead to more demand for home improvement products. However, these stocks
still need to be on a careful watch list as the overall sector is still on shaky ground.
The complete report on Home Depot is available for free at
http://www.StockCall.com/HD012213.pdf  

    Solid Performance from Lowe's  

    Lowe's Companies Inc.'s [Free Technical Report on LOW 
[http://www.stockcall.com/LOW012213.pdf ]] [1] stock performed well lately. After a long
bout of flat returns, it offered 40% return in the last 12 months. But the jury is still
out as the stock was recently downgraded by Canaccord Genuity from Hold to Sell. The
downgrade was mainly prompted by the company's relatively lackluster growth in
comparison to its more established competitors like Home Depot. But the downgrade does
not mean that Lowe's is not working towards setting the wrong right. The stock is a good
buy as it provides an impressive dividend yield of about 2%.  

    Lowe's is scheduled to report its fourth quarter earnings on February 25th and if
the previous quarter is any indication then the numbers are likely to be on the positive
side. The company trounced the consensus estimates in the third quarter with higher
revenue. It also grew its adjusted operating income while its gross margin improved as
well. But some of the company's new initiatives have received flak from its
collaborators and analysts alike. Lowe's seems to be becoming unmanageable with the
introduction of new product mixes and store layouts.  

    Home Depot on a Roll  

    The previous quarter had been good for Home Depot as well; it grew its comparable
sales by 4.2%, while Lowe's posted relatively lower figure at 1.8%, along with raising
guidance for its full year comparables. Home Depot is on its way to consolidate its
position in the sector. The company regularly outperforms its peers especially Lowe's
when it comes to important metrics. However, the company has its own set of problems. It
has come a long way since the ouster of Nardelli, but the company still has negative
growth rate for its 5 years sale metrics. Home Depot is still in a good position to
benefit from growth in consumer demand for home improvement products. It is also
steadily increasing its operating profitability. Home Depot still needs to work on
getting its efficiency back to pre-housing burst levels.  

    Home Depot has stable financial numbers and has the ability to withstand minor
shocks. The company also has good stock buyback program in place as it bought more than
$2.5 billion worth of its stock during 2012, offering good returns to its investors.  

    With improvements in the real estate front and the economy in general, investors are
hoping that this formerly steady sector will go back to being a popular buy option for
their portfolios.  

    Footer:  

        
        1) Lowe's Companies Inc. Technical Analysis [
          http://www.StockCall.com/LowesCompaniesInc012213.pdf ]


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