Chief Operating Officer Christopher Trompeter, CFA, of Tradition Capital Management, says Lowe’s Companies, Inc. (NYSE:LOW) is significantly undervalued right now, as the company is set up to benefit from an improving housing cycle.
The company would benefit from continued improvement in the housing market. Certainly, the fact that home prices have been increasing over the last few years as well as greater demand for home ownership has encouraged homeowners to either invest in their existing properties, or if they purchase a new property, there’s always generally investment on the part of the homeowner once the purchase is completed.
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Although there is some cyclicality associated with the demand for housing, but we believe that we’re in the middle innings of what we expect is going to be a reasonably long and improving housing cycle. So we look at that as a tailwind for Lowe’s. There are opportunities for Lowe’s to drive more business through their existing stores. They also offer online ordering and pickup as well. And there is room for them to also close the margin gap between Lowe’s and Home Depot.
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