Lowe’s Companies, Inc. (LOW), The Home Depot, Inc. (HD): Outperformance Likely to Continue

Lowe’s is also in the middle of a share repurchase plan and recently raised $2 billion in the bond market. The company plans to repurchase $5 billion of shares over the next two years.

Exclusive product offerings
Given the fact that Lowe’s Companies, Inc. (NYSE:LOW) has a price-match guarantee, Home Depot makes use of specialized exclusive consumer goods to attract customers by offering a different set of products. One of the products is a top-of-the-line, energy-efficient LED lightbulb manufactured by Cree, Inc. (NASDAQ:CREE).

Cree, Inc. (NASDAQ:CREE) recently announced the newest addition to its LED lightbulb product line, the Cree BR30 LED bulb, which is available exclusively at Home Depot. During a conference call, Cree, Inc. (NASDAQ:CREE) executives estimated the number of lightbulbs in people’s homes to be 5 billion. Partnering with Home Depot with exclusive shelf space allows the company to best profit from the growing trend of residential adoption.

According to a recent report by McKinsey, LED lightbulbs will see greater than 50% penetration by 2015. Cree’s CEO, Charles Swoboda, said this during the company’s fourth quarter 2013 conference call (Aug. 13):  “Our partnership with The Home Depot has demonstrated that great products at great prices, combined with a world-class retailer and a serious investment in marketing, can change both consumer behavior and the product category faster than many of the skeptics predicted.”

Through exclusive agreements such as the one with Cree, Home Depot is able to differentiate itself against its competitors by offering exclusive top-brand names. Customers looking to purchase a Cree lightbulb (which has received top-notch reviews from leading blogs such as The Verge) can only do so at Home Depot.

Conclusion
Homebuilders have been among the weakest stocks in the entire market over the last few weeks, and investors will continue watching news very closely. The most recent economic data showed that existing home sales jumped 6.5% to an annual rate of approximately 5.4 million units. This number came in above analyst expectations and further raises the case that the housing market is in recovery mode.

The Home Depot, Inc. (NYSE:HD) is well positioned in all aspects of its business to continue offering investors a return that greatly outperforms the S&P 500 and will likely continue doing so for years to come.

The article Home Depot: Outperformance Likely to Continue originally appeared on Fool.com and is written by Jayson Derrick.

Fool contributor Jayson Derrick has no position in any stocks mentioned. The Motley Fool recommends Home Depot and Lowe’s.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.