$LOW

Implied claim • moderate conviction • basis: multiple relative

Stock price has fallen nearly 28% from recent highs, making its valuation attractive compared to peers.

Implied claim • moderate conviction • basis: drawdown discount

But anyway, guys, getting back to Lowe's, one of the big reasons, the main reason that I think the stock is down, really just comes back to the housing market. Right now, the housing market is basically stuck, okay? Mortgage rates are still relatively high. So, for the millions of homeowners who locked in 3% mortgages a few years ago, the last thing they want to do is sell their house and finance another one at today's rates. Economists sometimes call this the lock-in effect. And when people aren't moving, then they also aren't taking on many of the big renovation projects that tend to come with buying or selling a home. Things like remodeling a kitchen, replacing flooring, or completely redoing a bathroom. Those are exactly the kinds of projects that Lowe's benefits from. On top of that, the bulk of Lowe's' business comes from DIY customers. And because inflation is still running rampant and people are tightening their budgets, a lot of consumers have been putting off these larger, more discretionary home improvement projects. In fact, Marvin Ellison, who is the CEO of Lowe's, recently said that this has been the most difficult housing market that he has faced in this business since the financial crisis. So, this isn't really a Lowe's-specific problem. This is something that's been impacting the entire home improvement industry. In fact, if you look at Home Depot's share price over the past year, its performance has been pretty similar to Lowe's, with both stocks down around 8 or 9%. Now, having said all of that, why would you want to buy Lowe's today with all of the headwinds that it's currently facing? Well, in my opinion, all of the headwinds that we just talked about are really more cyclical things rather than permanent. Eventually, people are going to start moving again. You know, eventually, they'll want to update their kitchens or their flooring or their bathrooms. Eventually, people will tackle all those home improvement projects they've been putting off over the last few years. I mean, at the end of the day, homes don't stop needing maintenance just because interest rates are high. In many cases, those repairs are just being delayed. M

Comparative claim • strong conviction • basis: multiple relative

Lowe's is presented as a more attractive investment than Home Depot due to its lower valuation, healthier payout ratio, and stronger dividend growth.