The Home Depot, Inc. (HD), Lowe’s Companies, Inc. (LOW): Two Hardline Stocks to Buy on a Housing Recovery

A forerunner

Masco Corporation (NYSE:MAS)’s earnings release gave the market an indication that the comps would decline for both The Home Depot, Inc. (NYSE:HD) and Lowe’s Companies, Inc. (NYSE:LOW). Masco discussed temporary top-line headwinds like unfavorable weather and delayed tax refunds for big-ticket items that it faced in the first quarter. In fact, pure plays on the housing sector like Scotts Miracle-Gro Co (NYSE:SMG) and Whirpool made similar comments.

For Masco Corporation (NYSE:MAS), while North American sales grew 5.5% in Q1, accelerating sequentially on a two-year basis by 85 bps, the company posted weaker-than-expected performance in paint. Sales growth in Masco’s decorative architectural products segment (predominantly Behr paint, The Home Depot, Inc. (NYSE:HD)’s exclusive line) was -0.5%, missing consensus sales expectations by 4.6% as the management noted “weather negatively impacted core paint-business comparables.” Last year, the segment experienced 15.7% growth in Q1 due to favorable weather.

However, as weather improves, so should Masco Corporation (NYSE:MAS)’s sales. Importantly, Masco said on its earnings call that sales were up in the mid-teens thus far in April.

Final word

After a relatively weak Q1, Q2 is expected to come in strong given positive commentary on April sales trends. Holistically speaking, The Home Depot, Inc. (NYSE:HD) is a good company to invest into given its efficient management team and a bright capital allocation plan for the future. And this is what makes it a better choice as compared to Lowe’s Companies, Inc. (NYSE:LOW). However, that doesn’t mean that I am not bullish on Lowe’s. The company’s rapid share-repurchase program along with tailwinds from the housing recovery will help the stock to move up.

The article 2 Hardline Stocks to Buy on a Housing Recovery originally appeared on Fool.com.

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