Say No To Trading
Public Markets Investor, Opportunistic Buying & Cost-Basis Management
Lowe's is a high-quality long-term hold to buy while housing is out of favor. Its five-year chart looks flat because of post-Covid sentiment, but its share count has fallen substantially over the past decade, and it has beaten the S&P 500 over 10 and 20 years. Q1 was a double beat with sales up 10%, though guidance spooked investors. The $210 level was the target for adding, and the timing of a housing recovery is unknown. x.comÂ
Home Depot is a best-in-class operator trading near 52-week lows, and it has historically come out of housing cycles stronger. Weak housing turnover has clearly been a headwind, but its balance sheet, scale, dividend and long-term pricing power still look very attractive. x.comÂ
Ugly housing conditions provide the contrarian sentiment for a major homebuilder bull run over the next 12 months. Bears investing through the rearview mirror are going to be proven wrong. x.comÂ
Lowe's looks like junk at current interest rates because it was valued at about 30x earnings with a low dividend. Per @sv_techie, the stock sits at a five-year low and keeps falling, and its trend will change only if the 10-year Treasury yield moves meaningfully. x.comÂ
US homebuilders look attractive because America remains structurally undersupplied with housing, and Berkshire Hathaway is buying quality builders while Wall Street focuses on near-term affordability pressure. Berkshire added about 2.74 million Lennar shares as elevated mortgage rates weigh on builder valuations, after acquiring Taylor Morrison and investing in D.R. Horton and NVR. Follow the smart money, but always mind the price. x.com x.comÂ
Lennar trades poorly as yields climb, hitting new 52-week lows, and it builds poor-quality homes. It is also engaging in activities aimed at propping up its earnings. x.comÂ
Select housing stocks blown out by weak starts, high rates, poor affordability and high commodity prices could rebound into the midterms, as the administration likely pulls levers to control rates. The Treasury secretary may use a bigger tool at next month's refunding after a $6B buyback failed, the Fed is less likely to hike than priced, and a housing plan, such as down-payment aid or federal-land supply, may be announced. QXO, Lowe's, Builders FirstSource and Simpson Manufacturing fit. x.comÂ
Sherwin-Williams looks fully valued at 24x earnings on a normalized housing market, leaving returns dependent on the multiple. Store count grows only about 2% on a 4,800 base as penetration matures; with roughly 2% comps at a 30% incremental EBITDA margin, EBITDA grows about 6%. It is a great business with low disruption risk, but higher-beta housing stocks should deliver better returns if the cycle normalizes. x.com x.com x.comÂ
Home Depot and homebuilders look awful and have broken below support. Both offer a lot of value and are way oversold, but they need interest rates, inflation and oil to come down before they can recover. x.comÂ
Homebuilders are cyclical stocks tied to interest rates, which makes them unappealing. x.comÂ
Sherwin-Williams can earn much more as housing turnover normalizes, because its pricing power holds even while its biggest end market is broken. Paint Stores comps rose 4.2% in Q2 with existing home sales at a 4.06M pace, and FY26 EPS guidance rose to $11.80-12.20. A normal 5.3M year could add about $1.50-2 of EPS, or roughly $14 of earnings power, 24x at $330, with upside past $17 if input costs help. PPG's exit and Kelly Moore's liquidation leave it gaining pro share. x.com x.com x.com x.com … Show more
