5 52-Week Low Stocks with Upside Potential

4. Lowe’s Companies, Inc. (NYSE:LOW)

Number of Hedge Fund Holders: 72   

52-Week Low as of May 23: $179.22

Real-Time Share Price as of May 23: $183.54

Lowe’s Companies, Inc. (NYSE:LOW) operates as a home improvement retailer. The firm is increasing earnings per share despite a decline in sales, has improved operating margin over the past three months, and is a sustainable dividend player. The company also continues to generate value through large share buyback programs. Despite a cooling housing market in the US, the firm remains well positioned to expand margins, even with the inflation numbers factored into the equation. 

On May 19, Jefferies analyst Jonathan Matuszewski maintained a Buy rating on Lowe’s Companies, Inc. (NYSE:LOW) stock and lowered the price target to $238 from $290, noting that the sales and margin guidance of the firm seemed “achievable”.

At the end of the fourth quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $6.8 billion in Lowe’s Companies, Inc. (NYSE:LOW), up from 60 in the preceding quarter worth $5 billion.

In its Q4 2021 investor letter, Pershing Square Capital Management, an asset management firm, highlighted a few stocks and Lowe’s Companies, Inc. (NYSE:LOW) was one of them. Here is what the fund said:

“Lowe’s Companies, Inc. (NYSE:LOW) is a high-quality business with significant long-term earnings growth potential

Supportive macroeconomic backdrop

-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog

-COVID-19 causing millennials to enter the housing market

Positioned to grow EPS largely independent of market conditions

-Idiosyncratic revenue opportunities driving share gains

-Self-help initiatives catalyzing operating margin expansion

-Buybacks representing ~8% of current market capitalization planned for 2022

Multi-year business transformation with substantial earnings upside

-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing-Potential to generate high-teens EPS growth over the next several years.

Lowe’s Companies, Inc. (NYSE:LOW) continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher prospective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”