With the housing market recovery in sight, many investors are turning their attention to home improvement retailers like Lowe’s (LOW) and Home Depot (HD). According to Mizuho Americas director David Bellinger, Lowe’s may come out ahead in this scenario due to its increased exposure to DIY home improvement.
Bellinger explained in a recent interview with Yahoo Finance Live that Lowe’s has a larger percentage of sales coming from the DIY market, around 75% compared to Home Depot’s 50%. This means that Lowe’s may have better leverage as the housing market begins to pick up.
Currently, the housing market has been relatively stagnant, with buyers and sellers hesitant to make moves due to high mortgage rates. However, with the Federal Reserve expected to cut interest rates in the near future, the cost of borrowing may decrease, prompting more activity in the housing market.
Lowe’s saw a decline in comparable sales in the last quarter, but Bellinger anticipates a positive turnaround in the second half of the year. This optimism is fueled by Lowe’s strong presence in categories like paint and outdoor seasonal appliances, which are often popular among new homeowners looking to personalize their spaces.
Additionally, Bellinger pointed out that the housing stock is aging, with about 50% of homes being 40 years or older. This means that there is a great opportunity for the home improvement industry to thrive in the coming years as homeowners seek to maintain and renovate their properties.
Overall, Bellinger sees a potential “renovation renaissance” on the horizon, which could benefit both Home Depot and Lowe’s as they position themselves to cater to this growing market. As the housing market bounces back and homeowners invest in their properties, Lowe’s may have the edge over its competitors in the home improvement retail space.
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