In this article, we discuss 5 stocks that can begin to rebound in 2023. If you want to see more stocks in this category, check out 10 Stocks That Can Begin to Rebound in 2023.
5. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 53
YTD Share Price Decline as of August 29: 21.73%
Lowe’s Companies, Inc. (NYSE:LOW) is a North Carolina-based home improvement retailer. On August 17, Lowe’s Companies, Inc. (NYSE:LOW) posted Q2 GAAP EPS of $4.67, exceeding estimates by $0.07. However, the firm’s revenue of $27.5 billion represented a drop of 0.3% year-over-year, and fell short of the market consensus by $680 million. The company expects FY2022 total sales of $97 billion to $99 billion, versus a consensus estimate of $97.5 billion. Lowe’s Companies, Inc. (NYSE:LOW) forecasts diluted earnings per share of $13.10 to $13.60, compared to the market’s estimate of $13.40. The company predicts total share repurchases of approximately $12 billion.
On August 26, Lowe’s Companies, Inc. (NYSE:LOW) declared a $1.05 per share quarterly dividend, in line with previous. The dividend is payable on November 2, to shareholders of record on October 19. The company’s shares deliver a dividend yield of 2.08% as of August 29.
On August 18, Truist analyst Scot Ciccarelli raised the price target on Lowe’s Companies, Inc. (NYSE:LOW) to $263 from $237 and maintained a ‘Buy’ rating on the shares after the company’s Q2 results. Lowe’s Companies, Inc. (NYSE:LOW)’s patterns remain strong and profitability is well-controlled, the analyst told investors, adding that the stock may re-rate higher in late FY22 or early FY23 if trends continue according to his expectations.
Among the hedge funds tracked by Insider Monkey, 53 funds were bullish on Lowe’s Companies, Inc. (NYSE:LOW) at the end of June 2022, compared to 65 funds in the prior quarter. Bill Ackman’s Pershing Square is the biggest stakeholder of the company, with 10.2 million shares worth $1.78 billion.
In its Q4 2021 investor letter, Pershing Square highlighted a few stocks and Lowe’s Companies, Inc. (NYSE:LOW) was one of them. Here is what the fund said:
“Lowe’s Companies, Inc. (NYSE:LOW) is a high-quality business with significant long-term earnings growth potential
Supportive macroeconomic backdrop
-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog
-COVID-19 causing millennials to enter the housing market
Positioned to grow EPS largely independent of market conditions
-Idiosyncratic revenue opportunities driving share gains
-Self-help initiatives catalyzing operating margin expansion
-Buybacks representing ~8% of current market capitalization planned for 2022
Multi-year business transformation with substantial earnings upside
-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing
-Potential to generate high-teens EPS growth over the next several years.
Lowe’s Companies, Inc. (NYSE:LOW) continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher prospective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”
