Home Depot or Lowe’s? Two operators disagree on which is the best bet

Home Depot and Lowe’s are blowing up.

The two stocks hit all-time highs Wednesday: Home Depot for the second day in a row, Lowe’s for a third. The two chains were investor favorites during the pandemic, as consumers spent more on home improvements.

But when it comes to the best bet, a technician and a fundamental investor are on opposite sides.

JC O’Hara, chief marketing technician at MKM Partners, says the charts tilt in favor of Home Depot.

“When I look at Home Depot, I think the breakup is a little more powerful,” O’Hara told CNBC’s “Trading Nation” on Wednesday. “This chart has a history of sideways consolidation for several months, followed by extremely bullish breakouts.”

The current consolidation reminds O’Hara of a similar stretch from 2018 to 2019 when stocks moved sideways for 18 months before recovering 20%.

“If history repeats itself, we could see Home Depot go up to $ 320, even $ 340. That’s why I like Home Depot right now,” O’Hara said.

Home Depot closed Wednesday at $ 292.75.

Fundamentals make a better case for Lowe’s, argues Quint Tatro, president of Joule Financial.

“From a qualitative standpoint, we think Lowe’s really appeals to DIY, sort of a home improvement man, Home Depot more to contractor,” a distinction that should benefit Lowe’s with recent stimulus checks, Tatro said during the same interview.

Tatro is also targeting an attractive 1.6 times sales and 16 times future earnings for Lowe’s compared to 2.3 times sales and 21 times the leading multiple for Home Depot.

“Plus, as a gimmick, he’s getting a much better balance from Lowe’s than Home Depot,” Tatro added.

Home Depot and Lowe’s have outperformed the S&P 500 this year, increasing at least 10%, while the benchmark has added less than 4%.



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