On November 30, 2011, Bloomberg reported shares of Home Depot Inc. and Lowe’s Cos. -- the two largest U.S. home-improvement retailers -- are outperforming other consumer discretionary stocks as the worst of the declines in the housing market may be over.
Americans are on pace to spend $337.3 billion on their homes, with annualized private-residential fixed investment rising 3 percent from 2010 for the three months ended Sept. 30, Bureau of Economic Analysis data show. This is only the second such increase since 2006 and unlike 2010, wasn’t boosted by government tax-credit stimulus programs including one for appliances, said Scot Ciccarelli, a New York-based analyst at RBC Capital Markets.
Same-store sales for the two retailers -- which track residential investment -- have started to improve and may pick up even more because “there’s been some industry stabilization,” said Ciccarelli, who upgraded Home Depot to “outperform” earlier this month and maintains the same recommendation on Lowe’s.
Comparable-store sales rose 4.2 percent at Atlanta-based Home Depot and 0.7 percent at Mooresville, North Carolina-based Lowe’s in the three months ended Oct. 30 and Oct. 28, respectively, the companies said earlier this month.
