Lowe's reported better-than-expected quarterly results on Monday and said sales would improve in 2010 as demand for remodeling projects picks up. Rival Home Depot is expected to announce earnings on Tuesday before the bell.
Should investors buy Home Depot’s stock ahead of the report? Budd Bugatch, managing director and director of furnishings at Raymond James & Associates and Laura Champine, senior retail analyst at Cowen & Company shared their insights.
“I think you do buy it ahead of the news—the headline comp numbers are likely to be positive,” Bugatch told CNBC. “Given what we saw with Lowe’s today with strength in the North East and Canada, it’s almost a given that Home Depot will at lest report a positive comp.”
Bugatch said he sees more room to run in Home Depot stocks.
“The trade is getting more crowded than it has been, but it still has room to run and it’s been my favorite for all of last year and remains my favorite stock right now,” he said.
In the meantime, Champine said in addition to sale trends, Home Depot has positive margin drivers.
“It’s why Home Depot has been stronger and my guess is that it’s stronger tomorrow as well,” she said. “For Home Depot to take market share, I think they need to execute on some of their cost initiatives and that’s pretty easily accomplished.”
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Bugatch owns shares of HD. No immediate information was available for Champine or her firm.