Lowes Companies Inc. (LOW-N)

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.

It reports next week. A great value name. Lowes delivers earnings and dividends well. Has owned it a long time.

Excellent company.
Will continue to hold.
Expects demand for building products to increase as economy recovers. 
Strong management team with good long term prospects. 

Trades at a lower multiple than HD. Increased operating margins from 11% to 16%, pro business is expanding. Applying HD playbook very successfully.

He just sold Home Depot and holds a small position in this. The difference is that Lowes is growing its professionals segment, which is up 10% the past quarter.

It reports Wednesday, and the street is bearish. But he likes LOW, because it's already declined from Home Depot's last quarter and he expects the CEO is tell a positive forecast.