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Lowe’s Companies, Inc. (LOW) Has Considerable Upside According to Barron’s

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?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

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.

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