Lowes Companies Inc. (LOW-N)

He wouldn't buy at this point, consumer is still very weak. He'd wait till consumer and housing are stronger. He prefers LOW to HD because of its cheaper valuation and execution of the (borrowed) HD playbook.

They beat top and bottom, with a positive surprise in same-store sales. Good. The pro segment continues to growth with wider margins. And we're entering a strong seasonal period.

This stock never soars, but steadily goes higher. It reports Wednesday.

This and Lowe's are quality businesses that he's long owned. Healthy profits and capital efficiency. They will benefit if interest rates decline. Be patient.

They report tomorrow. Loves it for its value and dividend growth, trading at 5 multiple points lower than Home Depot.

Likes it because they are growing near 9% in the professional segment, though it has a large DIY business.

He sold Home Depot to buy this, because it trades at a lower PE and they execute as well. Managers here used to run HD and apply the same playbook at Lowes. Operating margins in the last 10 years have almost doubled. He exited both stocks given higher PEs and weakening consumers. Would like to re-enter later.

Owned HD 25 years ago. Took profits 10-12 years ago, and switched to LOW. Based on LOW successfully adopting the HD playbook to grow gross margins, and on valuation (LOW was 4 multiple points lower than HD). HD is now trading at a low 20s multiple, and LOW is about 17x. 

Out of both right now. He became skittish on consumer. It's not they've been poor performers, but the new choices have rewarded clients to a better extent.

Great companies, great franchises. Always looking for an entry point, it's not yet. HD reported this morning, shy on revenue, mentioned consumer pulling back. He wouldn't be surprised to be in one or the other in the not-too-distant future.

Right after they recently reported, sellers pulled the trigger before they heard the conference calls, which indicated the companies are doing well. These are good companies and those sellers deserved to lose money. HD announced that their inventory glut of 2023 is now over, that inventory fell 16% last quarter vs. the prior year. Therefore, quarters will improve going forward, especially in the key spring gardening seasoning when sales usually pick up. Also, HD boosted their dividend. As for Lowe's, the CEO announced that high-margin building materials was their best-performing segment, and they will launch a loyalty rewards program in the spring  Further, bad weather impacted sales in January for both companies.

It reports Tuesday. Home Depot reported a panned quarter, but later the stock rose, as he expected. HD and LOW tend to see shares get hit, then come back. HD said that their DIY reno customers are doing well, and LOW attracts more of this DIY business. He expects LOW stock to break through.

Share rose 3.2% on a simple upgrade from hold to buy. That's overdone and he's suspicious of today's rally. A sign of market frothiness.

Has since sold shares. Waiting for shares to fall before buying again. Concerns over consumer spending a point of worry. If recession occurs, will impact consumers first. Overall, a strong business, so will buy again at another time. 

Reports tomorrow. Shares up only 3% this year. Home Depot's report gives him hope here. Unlike HD, Lowes relies more on DIYers in home renos (the pros use HD more), which is a plus.

The homebuilder sector has been hurt by higher interest rates as the consumer shows some cracks in spending. Employment is holding up for now, so maybe the consumer will hold up after all. Watch the consumer. Prefers Lowes for its better multiple.

Is down 10% in the last 3 months. It's been tough for the homebuilders. They did have a positive quarter. Likes that they are gaining market share in the professionals segment and oeprating margins continue to grow. Happy to hold onto this.