Lowe’s Companies (LOW) suffered the devastating effects of the U.S. housing market crash as the company’s profit was cut in half, but it is emerging as a success story for long-term investors as the U.S. housing dynamics are on the verge of improving, says John Dowling, Director of Research, Portfolio Manager and Research Analyst at Golub Group LLC.
“As you know, Lowe’s operates in a duopoly industry along with Home Depot (HD). The U.S. housing market crash had cut the company’s profits in half. It was clear at the time of purchase that patient investors with a long-term horizon would benefit from an eventual rebound in the housing market,” Dowling said.
Dowling credits Lowe’s managment team’s commitment to repurchasing half of the company’s stock in the next five years with enabling the company to increase its earnings per share in the future.
“Since initiating the position in Lowe’s, management has remained committed to the share repurchase program and overall company margins have improved. Not surprisingly, this has led to a dramatic re-evaluation of the company’s shares by the market,” Dowling said.
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