Although shares of Lowe’s Companies, Inc. (NYSE:LOW) have already rallied 16% year-to-date, Andrew Bary of Barron’s believes the home improvement store stock has further upside ahead. Specifically, Bary believes Lowe’s Companies, Inc. (NYSE:LOW) could rally another 20% or more, as as investors give more credit to the robust real estate market and strong economy, both of which make homeowners more willing to do renovation projects that might drive up demand for home improvement stores. Furthermore, Lowe’s Companies, Inc. (NYSE:LOW)’s rising profit margins and strong share repurchase program (the company has reduced its float by a third in the last six years) could make the path of least resistance up, rather than down.
As an added bonus, Bary writes that Lowe’s Companies, Inc. (NYSE:LOW) is relatively Amazon proof seeing as many home improvement store products are bulky and heavy. Many customers want real time advice, something that Amazon would be hard pressed to offer at the current moment. Factoring all those attributes, Bary believes Lowe’s EPS has room to rise and that shares could ‘hit $100’.
What Does The Smart Money Sentiment Say?
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According to our data, hedge fund activity in Lowe’s has been stable. Of the 742 elite funds we track, 66 had a bullish position in Lowe’s Companies, Inc. (NYSE:LOW) at the end of the fourth quarter, down just 2 funds from the previous quarter. In terms of individual noteworthy activity, Larry Robbins‘ Glenview Capital initiated a new stake of over 4 million shares in Q4.
The Bottom Line
With the economy strong, housing robust, and major home-improvement chains rather Amazon-proof, Barron’s believes Lowe’s shares could potentially rally 20% or more. For further home related reading, check out the article, 10 Best Rated Biggest Home Builders In USA.