Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Lowes and Home Depot
Old 08-24-2006, 12:23 PM   #1
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Lowes and Home Depot

Is it time to buy LOW and HD yet?* *They both seem to be trading at a low P/E due to housing and consumer spending fears.

I figure that more people will be doing home improvement even if there is a housing bust (they'll make their homes more attractive to sell, and they'll choose to stay put and fix-up rather than move).* * During the last housing bust, Lowes and Home Depot seemed to do reasonably well.

LOW is trading at a forward P/E of about 11, price/book of about 2.5, and price/sales of less than 1.

What do you think?
__________________

__________________
wabmester is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Lowes and Home Depot
Old 08-24-2006, 12:31 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
 
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 5,881
Re: Lowes and Home Depot

FWIW, about a month ago Cramer did an analysis on these 2 and noted that HD was about done as far as growth goes but Lowes (due to it's much smaller market share) had a lot of room to grow.

I am in no way implying that Cramer is one to follow on anything at all, however I thought that this small analysis was memorable.
__________________

__________________
Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 12:36 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Lowes and Home Depot

Quote:
Originally Posted by mickeyd
Cramer did an analysis



Yeah, this is the same guy that said on national television recently that investors should avoid DSX because of their single hulled tankers. DSX does not own any tankers of any description.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 12:53 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Posts: 2,119
Re: Lowes and Home Depot

remember Channel Lumber

Remember all those other home improvement stores??

They are all gone.

Home depot, Lowes big box retailers that if gasoline really spikes and the housing market goes poof well they could see real declines and their stock prices will go noplace for a very long time.
__________________
newguy88 is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 01:54 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,616
Re: Lowes and Home Depot

There is no way to really know if this is a good time or not.

I have owned HD and LOW off and on this year and in past years. I have been lucky with LOW and unlucky with HD. I bought LOW in July and chickened out last Friday and sold before this week's earnings announcement for a small profit. One might have expected LOW to do well because HD & LOW often mimic each other. Since HD rose on it's earnings announcement, my initial expectation was that LOW would rise also last Monday, but I lost my fortitude on Friday.

LOW is down 10% since I sold. I got very lucky.

There might be a bounce worth playing, but take your profits when you have them with these guys in the short term.

For long term buy-and-holders, I say avoid them right now. The money that folks would use to buy things at these stores is being burned up in their car engines. With housing sales going down, the number of folks who would need to buy stuff is going down as well.

So fundamentally, the numbers may look like buy, if the future is like the past. Unfortunately, the future is not like the past right now.

Not now, but keep a watch on them, IMHO.
__________________
LOL! is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 02:47 PM   #6
Recycles dryer sheets
 
Join Date: Feb 2005
Posts: 454
Re: Lowes and Home Depot

I'm holding LOW, bought it perhaps 6 months ago, as a Grantham/GMO pick, believing his "quality is cheap" mantra and generally believing that largecap and growth stocks were underpriced compared to the smallcaps and value funds I usually prefer to own.

You can read a few sentences of his opinion in the quarterly reports online (U.S. Quality fund, GMO.com) and find if the firm overall has been buying or selling lately on the Nasdaq institutional ownership page, if you like.

Haven't been looking closely lately. Suppose if I find something to sell in near future, will have to find a buy, and HD could be a possibility, as could Dell or Citi. Or I could always double down on LOW... luckliy, I only took a half size position in it, so if it drops much more by the time I get around to needing to buy something, I could even triple down.

(I was about to say that I didn't think it was down much from my entry point... but then I checked! )
__________________
lazyday is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 02:52 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,359
Re: Lowes and Home Depot

I bought LOW today at $26.61. *

They may have a couple bad years if housing and the economy get really bad, but I can't imagine that I will regret buying at this price in 5-10 years. *

Note-- I have avoided buying HD because their current management seems to hold their customers, employees, and stockholders in contempt. *They are incredibly cheap though. *I expect that they could go up 10% simply by announcing that they were canning Nardelli.

Quote:
Originally Posted by wab
Is it time to buy LOW and HD yet?* *They both seem to be trading at a low P/E due to housing and consumer spending fears.

I figure that more people will be doing home improvement even if there is a housing bust (they'll make their homes more attractive to sell, and they'll choose to stay put and fix-up rather than move).* * During the last housing bust, Lowes and Home Depot seemed to do reasonably well.

LOW is trading at a forward P/E of about 11, price/book of about 2.5, and price/sales of less than 1.

What do you think?
__________________
Hamlet is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 03:02 PM   #8
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Lowes and Home Depot

OK, you guys talked me into it.*

I bought some LOW today.

I also bought IWC for some microcap exposure, and XLP because I convinced myself that branded consumer staples will have good long-term growth.

I think that's all the shopping I plan to do until The Fall of 2007.
__________________
wabmester is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 03:15 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,616
Re: Lowes and Home Depot

I couldn't interest you in a little Fastenal (FAST) here, could I?
__________________
LOL! is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 03:32 PM   #10
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Lowes and Home Depot

Quote:
Originally Posted by LOL!
I couldn't interest you in a little Fastenal* (FAST) here, could I?
Not me. I'm bearish on both retail and construction, but I'm always open to making a small contrarian bet if the valuation looks reasonable and long-term prospects look sound. I know I can't predict the future, but I get nervous when the herd is going in the same direction I am.
__________________
wabmester is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 03:48 PM   #11
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,359
Re: Lowes and Home Depot

FAST was the first stock I owned. My grandfather gave me 3 shares (at about $20/each) for my birthday in 1990. Those original 3 shares are now 48 shares at about $35/share.

So $60 turned into $1680 in 16 years. A 28-bagger.

They'll pry my Fastenal from my cold, dead hands

Quote:
Originally Posted by LOL!
I couldn't interest you in a little Fastenal* (FAST) here, could I?
__________________
Hamlet is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 03:51 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Lowes and Home Depot

Hmmm, a home improvement retailer going into a combination housing bust & collapse in consumer spending? No thanks.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 04:08 PM   #13
Recycles dryer sheets
 
Join Date: May 2005
Posts: 438
Re: Lowes and Home Depot

Lowes is being supported by my current mobile home remodeling project.
__________________
rmark is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 04:18 PM   #14
Full time employment: Posting here.
 
Join Date: Mar 2005
Posts: 927
Re: Lowes and Home Depot

I'm in the same boat with you, rmark, only with Home Depot as beneficiary.

If I'd put the same amount into their stock as I've spent on my rental rehab, I'd be majority shareholder by now.

(BTW, these guys are SO disorganzied... it's taken me 5 phonecalls just to disconfuse one credit card payment. I wouldn't buy their stock for that reason alone -- treating customers this sloppily is a recipe for disaster, IMHO.)
__________________
Caroline is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 05:34 PM   #15
Thinks s/he gets paid by the post
maddythebeagle's Avatar
 
Join Date: Jun 2005
Posts: 2,450
Re: Lowes and Home Depot

I would buy them both.....I like stocks that have "doom and gloom" priced into the stock....that way if only get one or the other....the price will go up....pretty low risk
__________________
- Hurry! to the cliffs of insanity!
maddythebeagle is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 09:31 PM   #16
Recycles dryer sheets
 
Join Date: May 2006
Posts: 442
Re: Lowes and Home Depot

Quote:
Originally Posted by wab
Is it time to buy LOW and HD yet?* *They both seem to be trading at a low P/E due to housing and consumer spending fears.

I figure that more people will be doing home improvement even if there is a housing bust (they'll make their homes more attractive to sell, and they'll choose to stay put and fix-up rather than move).* * During the last housing bust, Lowes and Home Depot seemed to do reasonably well.

LOW is trading at a forward P/E of about 11, price/book of about 2.5, and price/sales of less than 1.

What do you think?
First off the whole S&P 500 has a P/E of 14.6, so an P/E of 11 is not that low.
Second, down 20% is not "doom & gloom" pricing. Try something like down 40%.
Third, you got to figure out how people are going to finance their home improvement projects. No more tapping in on the 2nd mortage or anything like that. Credit is getting more costly. Home improvement projects can just be put on hold for now, unless yuo need a new roof or something like that.

Bottom line, wait for more downward movement and then jump in.



__________________
dmpi is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-24-2006, 09:35 PM   #17
Recycles dryer sheets
 
Join Date: May 2005
Posts: 438
Re: Lowes and Home Depot

I've had a Lowes delivery to my property that was 90% wrong - wrong length deck boards, too few 4 x 4's, no 2 x 6's (could have mentioned they were out of stock before selling them to me), etc. And this after I went in with a written list.

Oh well, such is life.
__________________
rmark is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-25-2006, 02:27 PM   #18
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Re: Lowes and Home Depot

Quote:
Originally Posted by wab
Is it time to buy LOW and HD yet? They both seem to be trading at a low P/E due to housing and consumer spending fears.
What do you think?
Hey, Wab, how are those MOVI shares doing?!

I agree that Lowes & Home Depot are trading at a discount. But I wouldn't buy either of them until we start reading about multi-year lows.

And on that subject, Microsoft isn't too far away from where it was eight years ago-- would you buy it today? What about Wal-Mart? Or would you claim that the markets have fundamentally changed their business models, leaving them too big & slow to adapt? Same concerns exist for Lowes & Home Depot, but we haven't seen the real pain start yet. Give it five or eight years.

Just like MOVI.

But I'll take another look at Home Depot when Nardelli goes down in flames.

_________________________________

Separate Home Depot question: Do the employees at your local Home Depot wear aprons or some means of identifying them as employees?

Three times over the last six months I've been accosted by total strangers while I've been browsing the Home Depot aisles. Two of them seemed like intrusive know-it-all handymen eager to brag about their knowledge (not that I'm personally familiar with that stereotype, of course) and I was pretty sure the third was flirting with me. Luckily (in my opinion) she was a woman but my spouse was not amused.

It turned out that all three were HD employees, but they weren't wearing aprons or even nametags. We're not talking about someone who was coming into the store for their shift and stopped to help, or someone chatting on their way home. These were people working their aisles but you couldn't tell them apart from the customers and of course you didn't know their names.

While I'm encouraged at the presence of HD employees actually working their aisles and even possessing some knowledge of their wares, I'd be a little concerned about being accosted by total strangers. Are these workers still trying to earn the coveted orange apron, or is HD too cheap to give their newbies a nametag?
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-25-2006, 02:40 PM   #19
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Lowes and Home Depot

Quote:
Originally Posted by Nords
Hey, Wab, how are those MOVI shares doing?!
That was a wild ride.* *I made a small profit when I sold on a very odd day.* *The price surged to $7.50 one day on no news (possible buy-out rumor, possible attempt by a big buyer to force short covering).* *It looked like a nice time to exit.*

Quote:
I agree that Lowes & Home Depot are trading at a discount.* But I wouldn't buy either of them until we start reading about multi-year lows.
There's no question that buying "deep value" can juice your returns, but deep value isn't always available.* *I had a bond mature and wanted to put the money to work right away.* *MSFT and WMT look like reasonable values as well.* *I wouldn't expect the same sort of returns they got in their hypergrowth days, but I'd expect them to grow as fast as the economy does.* *I'm not swinging for the bleachers with LOW.*
__________________
wabmester is offline   Reply With Quote
Re: Lowes and Home Depot
Old 08-25-2006, 05:31 PM   #20
Recycles dryer sheets
 
Join Date: Feb 2005
Posts: 454
Re: Lowes and Home Depot

Quote:
Originally Posted by Nords
What about Wal-Mart? Or would you claim that the markets have fundamentally changed their business models, leaving them too big & slow to adapt? Same concerns exist for Lowes & Home Depot, but we haven't seen the real pain start yet.
How do you think the markets or models have changed on WalMart or Lowes, in ways they haven't yet adapted to?
__________________

__________________
lazyday is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Scott Burns burns Home Depot REWahoo Other topics 17 03-06-2007 10:09 PM
Goodbye FIRE, I'm headed to the poorhouse saluki9 FIRE and Money 38 12-28-2006 02:16 PM
unlicensed home repairs? Caroline Other topics 17 04-07-2006 04:37 PM
Lowe's 10% Discount coupon MJ Other topics 14 09-06-2005 08:35 AM
Home Warranties - Worth it? BristolBane Other topics 11 07-09-2005 05:28 PM

 

 
All times are GMT -6. The time now is 06:35 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.