2 Home Improvement Stocks to Buy This Month

NYSE: LOW | Lowe's Companies, Inc.  News, Ratings, and Charts

LOW – The heightened demand for attractive domiciles with stylish interiors is helping home improvement companies thrive. The industry registered massive gains last year, and analysts expect the trend to continue. Given this backdrop, we think established home improvement companies Lowe’s (LOW) and Mohawk Industries (MHK) could be quality investments. So, let’s take a close look at these names.

The home improvement market has generated significant growth since the onset of the COVID-19 pandemic because people have been forced to spend more time at home, which has heightened their interest in home improvement and maintenance. Furthermore, homeowners shifting preference towards modern and energy-efficient solutions is motivating them to invest in sustainable restructuring and renovation works to limit environmental impacts. With this tailwind, the home improvement services market is expected to reach $585.30 billion by 2030, registering a 6.2% CAGR from 2021 – 2030.

However, there is a shortage of affordable houses in developed regions, while property prices are surging, which is encouraging homeowners to renovate their existing homes rather than move to new homes. Furthermore, remodeling newly bought old homes before moving in is another trend that is contributing to the industry’s growth.

Given this backdrop, we think established home improvement companies Lowe’s Companies, Inc. (LOW) and Mohawk Industries, Inc. (MHK) could be solid bets now.

Lowe’s Companies, Inc. (LOW)

LOW in Mooresville, N.C., is a home improvement retailer in the United States and internationally. The company offers construction, maintenance, repair, remodeling, and decorating products.

On Nov.17, LOW announced a multi-year commitment to become the leading retail destination for aging-in-place and life-change solutions through Lowe’s Livable Home launch. The company is also expanding its service options to customers seeking assessments through Lowe’s associates and Lowe’s independent service provider network. This one-stop destination should help LOW attract more customers and enhance its position in the industry.

Also in November, LOW announced the upcoming launch of Measure Your SpaceBETA, an intuitive, end-to-end room scanning, measurement, and estimate experience in Lowe’s iOS app. The company is investing in emerging technologies like LiDAR, AI, and mixed reality to make home improvement simple and intuitive. “We call this future spatial commerce, and we’re excited to bring it to our customers,” said Seemantini Godbole, Lowe’s executive vice president and chief information officer.

LOW’s net sales increased 2.7% year-over-year to $22.92 billion in its fiscal third quarter, ended October 29. Its operating income stood at $2.79 billion, up 28.2% from the same period last year. Its net earnings grew 174% from its year-ago value to $1.90 billion. And the company’s EPS increased 200% year-over-year to $2.73.

A $20.84 billion consensus revenue estimate for its fiscal fourth quarter, ending January 2022 indicates a 2.6% improvement from the same period last year. Analysts expect the company’s EPS to be $1.69 in the current quarter, reflecting a 27.1% rise year-over-year. Furthermore, LOW surpassed the Street’s EPS estimates in each of the trailing four quarters.

LOW has gained 58.1% in price over the past year and 32.7% over the past six months to close yesterday’s trading session at $257.79.

LOW’s strong fundamentals are reflected in its POWR Ratings. LOW has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

LOW has a B grade for Sentiment and Quality. Among the 61 stocks in the B-rated Home Improvement & Goods industry, LOW is ranked #9.

Beyond what we have stated above, we have also rated LOW for Growth, Value, Momentum, and Stability. Click here to view all LOW ratings.

Mohawk Industries, Inc. (MHK)

MHK in Calhoun, Ga., designs, manufactures, sources, distributes, and markets flooring products for remodeling and new constructions of residential and commercial spaces worldwide. It operates through three segments: Global Ceramic; Flooring North America (Flooring NA), and Flooring Rest of the World (Flooring ROW).

The company signed The Climate Pledge, a sustainability-driven effort, and agreed to incorporate climate-sensitive strategies, neutralize remaining emissions with permanent and socially beneficial offsets, achieve net-zero annual carbon emissions by 2040, and implement decarbonization strategies.

MHK’s net sales increased 9.4% year-over-year to $2.82 billion in its fiscal third quarter, ended Oct. 2. Its operating income grew 37% from its year-ago value to $359.97 million. Its adjusted net earnings came in at $272.05 million, indicating an increase of 16.8% from the same period last year. And the company’s adjusted EPS increased 21.2% year-over-year to $3.95.

Analysts expect MHK’s revenues to increase 17% year-over-year to $11.17 billion in its fiscal year 2021. The $14.77 consensus EPS estimate for the year indicates a 67.3% rise year-over-year. The company has an impressive earnings surprise history; it has beaten the consensus EPS estimates in each of the trailing four quarters.

Over the past year, the stock has gained 26.2% in price to close yesterday’s trading session at $180.47.

It is no surprise that MHK has an overall grade of B, which equates to a Buy rating in our proprietary POWR Ratings system. MHK also has a B grade for Value, Momentum, and Quality. It is ranked #6 in the Home Improvement & Goods industry. Click here to view additional MHK ratings for Growth, Sentiment, and Stability.

LOW shares were trading at $252.16 per share on Friday morning, down $5.63 (-2.18%). Year-to-date, LOW has declined -2.45%, versus a -2.04% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
LOWGet RatingGet RatingGet Rating
MHKGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com

3 AI Stocks to Buy Now

AI regulation is a foregone conclusion, it's just left to be determined who in government will formulate the rules and enforce them. Elon Musk thinks a whole new agency will be needed to enforce the massive amount of regulation coming down the road. These three companies, Red Violet (RDVT), Akamai (AKAM) and Cisco (CSCO), are at the forefront of companies implementing those regulations, and should see a pretty penny in profits for their work.

Stock Alert: Just Another BUY THE DIP Opportunity

Traders threw a tantrum after the Fed shared details on their rate hike plans. This has the S&P 500 (SPY) hitting the lowest level in quite a while. Gladly, things are not as dire as they seem. That is why Steve Reitmeister shares his latest insights to explain why a bull market is still in place...and how to target the best stocks and ETFs for the days ahead. Read on for the full story below...

My Favorite Energy Stock Under $10

Oil is back in the headlines as it has rocketed higher on a combination of factors over the past two months. This means oil stocks should definitely be back on your radar. And this under $10 oil stock has popped up on the POWR Ratings radar, Battalion Oil (BATL).

Coca-Cola (KO) and 2 More Beverage Stocks – Buy or Sell?

The beverage industry exhibits a bright outlook due to evolving consumer preferences amid rising health consciousness. Therefore, let us analyze whether leading beverage stocks Coca-Cola (KO), National Beverage (FIZZ), and Celsius Holdings (CELH) are Buy, Hold, or Sell now. Read more...

100 Best Stocks for October

Our computer models are dialed into the 100 best stocks for October 2023. What makes them “the best stocks”? Years of hard work to find the precise factors that lead to market beating stocks (SPY). Like our coveted strategy with an average annual return of +57.15%. And yes, it even produced impressive profits during the 2022 bear market. Now is the time to discover the winning stocks it is picking for the weeks and months ahead. Get full details below...

Read More Stories

More Lowe's Companies, Inc. (LOW) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All LOW News