We believe that several factors such as home price appreciation, the low interest rate environment and an aging housing stock in the US should improve the home improvement sector in 2021. LOW currently holds only ~10% of the $900bn home improvement market and we believe that it can expand its market share given its scale and omni-channel investments through expansion of its Pro business and improved online penetration. Lowe’s also has ample flexibility with its cost structure through managing store expenses, advertising, incentive comp and investments.

Performance since inception*

Lowe’s Companies, Inc. is the second largest home improvement retailer, operating more than 1,850 stores in the US, Mexico and Canada. The company offers products and services for home improvement, home décor, home maintenance, home repair and remodeling and maintenance of commercial buildings. The company serves retail and commercial customers.

Price History 1 year

Lowe’s recently laid out a credible plan to deliver enhanced shareholder value on its Analyst Day and was upbeat on the outlook for the home improvement market that is on pace to grow mid-teens this year. Management believes that it has   the flexibility to drive operating margin improvements regardless of the economic environment while pursuing business expansion. The biggest players, Lowe’s and Home Depot currently have around 24% of market share, indicating that there is a long runway for market share gain as Lowe’s continue to expand its business

Price History 5 years

Investing in Lowe’s carries several risks including but not limited to, (1) a slowdown in the new home/real estate market, (2) diffi culty in further store expansion, (3) competition with retail competitors, (4) overall economic slowdown and the risk associated with investing in the general market.

* Total return including dividend yield. For an ADD idea: positive performance if price went up. For a REDUCE idea: positive performance if price went down.
Source: UBS. Prices correct as of latest data available on the date indicated. Company Profile, Investment Case and Risks in Investment Case as of 10 December 2020