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$24.89 -0.25 (-0.99%)
5/16/2008 4:02 PM

Lowe's Companies, Inc. (LOW)

CAPS Rating:
***

The Company is a home improvement retailer, with specific emphasis on retail do-it-yourself customers, do-it-for-me customers who utilize its installation services, and Commercial Business Customers.

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Avatar jstegma (99.19) Submitted: 4/02/08 6:11 PM : Underperform Start Price: $22.84 LOW Score: -1.05

Flip this house is gone, at least in the real world. I don't know if the show is still on TV or not. That show was better than any paid ad Lowes and HD could ever dream of. "Spend $30k on your kitchen remodel - after all, it's an investment. See, these people here just made $50k in 25 days remodeling a kitchen, doing some major landscaping, and replacing the flooring. You can do it too." It was more than just a show. It was a dream that people wanted to believe. Don't tell me that sh*t didn't help Lowe's sales. Lowe's will survive this mess, but they are definitely going to miss having people believe that home remodeling was going to pay for itself when the house is sold.

Besides the dream that lived in a lot of people's heads, there was some basis in reality as well. It was the "Housing ATM". If you redid your kitchen and bathrooms, your house would appraise higher. Basically, you could buy stuff at Lowe's and then borrow against it. You could even borrow more than the price of the collateral. Remember, you spend $30k to remodel the kitchen, and the house goes up $50k in value, then you can borrow $40k more. You use $30k to pay for the remodel, and you have $10k left over. You never have to pay that $10k back because of course you house will never stop going up in value. Well not until about 2007 anyway when the party suddenly ended rather abruptly. It's hangover time people.

It wasn't Lowes and HD's fault that all this happened, but they were certainly beneficiaries of it. Those days aren't coming back, so don't invest in the stock hoping they will. If you want to own stock in Lowe's, wait until people have had time to figure this out.

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Avatar AntiCramer (23.24) Submitted: 5/07/08 11:44 AM

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I agree with almost everything you said, except, those days are over. With millions of homes in foreclosure, obviously they are not being taken care of. These homes will all be purchased, and repaired, remodeled, updated, etc. Lowes and Home Depot stocks have taken a beating, as they should, but....where are you going to go when you need to fix up your house. People will continue to graduate from college, get jobs, start families, and buy their first home, or upgrade their existing home. The cycle won't stop, and with the P/E of these 2 stocks, now is the time to start building positions. Good luck to you!

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Avatar jstegma (99.19) Submitted: 5/08/08 1:19 PM

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I don't think the remodeling of foreclosures will be nearly enough to keep these companies growing. HD and Lowes sell good stuff that tends to last a long time. The past several years were the good years. People bought a lot of good stuff that will last a long time. The next few years are the bad years. People won't be buying so much new stuff like stainless steel appliances and granite countertops and hardwood floors. They'll make do with whatever improvements they got during the good years and wait for better times to come around. HD and Lowes will survive, but they will be struggling big time. The good years will come again, but by then their stocks will be a lot cheaper than they are today.

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