In this article we discuss the 5 best consumer discretionary stocks to buy now. If you want to read our detailed analysis of the consumer discretionary industry, go directly to the 15 Best Consumer Discretionary Stocks to Buy Now.
5. Lowe’s Companies, Inc. (NYSE: LOW)
Number of Hedge Fund Holders: 61
Lowe’s Companies, Inc. (NYSE: LOW) is an American retail company that deals in home improvement. The company started as a hardware store in North Carolina and is now one of the largest home improvement organizations in the world. It serves over 20 million customers per week and has more than 300,000 associates in the U.S. and Canada.
In Q1 2021, Lowe’s Companies, Inc. (NYSE: LOW) reported net earnings of $2.3 billion, compared with $1.3 billion during the same period last year. The EPS was recorded at $3.21, beating the estimate by $0.59. The company generated $24.4 billion in revenue, up from $19.7 billion in the prior-year quarter. Comparable sales in the U.S. also grew by 24.4% in the first quarter. The company’s board announced a quarterly dividend of $0.80 per share, showing a 33% growth. The company also paid $440 million in dividends during the quarter.
In June, Wells Fargo praised the company’s earnings and maintained an ‘Overweight’ rating on the LOW stock. Similarly, in May, RBC Capital also acknowledged a 24% growth in the company’s home improvement sector, and raised its price target on LOW to $240, with an ‘Outperform’ rating. The LOW stock has gained 38.05% in the past year.
As of Q1 2021, 61 hedge funds have positions in Lowe’s Companies, Inc. (NYSE: LOW), worth $5.17 billion. With 11.9 million shares, worth $2.27 billion, Pershing Square is the leading shareholder of the company.
Pershing Square Holdings Limited released its Q4 2020 investor letter and mentioned Lowe’s Companies, Inc. (NYSE: LOW). Here is what the company has to say about LOW:
“Lowe’s is a high-quality business with significant long-term earnings growth potential. We initiated our investment in the company in April 2018 largely because we believed that the hiring of a new high-caliber management team could dramatically improve the business and close the performance gap to its closest competitor, Home Depot. Marvin Ellison became CEO in July 2018, and immediately began working on a multi-year transformation plan to bolster Lowe’s retail fundamentals, reduce structural costs, expand distribution capabilities, and modernize systems and the company’s online capabilities.
In 2020, Lowe’s experienced unprecedented demand driven by consumers nesting at home, higher home asset utilization and a reallocation of discretionary spend. Lowe’s earlier decision to modernize the company’s online offering allowed it to meet consumers’ surging demand. Further, its commitment to improve the company’s retail fundamentals allowed Lowe’s to showcase its enhanced merchandising, greater in-stock-levels, and excellent customer service. In the fourth quarter, the company completed 95% of its store layout resets which include a more intuitive shopping experience complete with a more Pro-centric layout (by “Pro” we refer to the professional tradesmen that perform repair and maintenance, remodeling and construction services). The company is also rolling out a new Pro CRM tool, which should improve Lowe’s Pro market share…” (Click here to see the full text)
