March Standout: Lowe's (LOW)

Updated: Dec 3, 2021

Each month we'll be highlighting one of our top holdings for our clients. A month of performance is obviously a very short time period but we'll dive into the stock and what they're doing and maybe why they're performing so well.

Lowe's is a home improvement retailer. They offer a line of products for construction, maintenance, repair, remodeling, and decorating. They operate almost 2,000 stores and sell products through their websites as well.

Lowes had a great run in March finishing the month up over 18%. More importantly, Lowe's had a great year in 2020. Sales jumped 27% for the year and comparable same store sales were up over 28%. A driving factor has been the consumer who was stuck at home looking to improve their dwelling to make it more comfortable and stylish. The fact that consumers had excess money to spend on their home because they weren't traveling and eating out benefited Lowe's greatly. Demand was strong across all products and online sales were up over 120%. Lowe's also continued it's share buyback which improved earnings per share 41% from the previous year.

As good as last year was, the strength for Lowe's can continue. While it might be tough to beat last years sales tally, it doesn't mean consumers are going to stop spending at Lowe's altogether. Furthermore, Lowe's continues to make improvements operationally which will improve their profitability overall.

While I don't think you're getting a great deal at current prices near $200, I'm in no rush to sell this name. Patience will be required going forward as I think some of the gains have been pulled forward but you are by no means buying a poor company in Lowe's.