Lowe's (LOW) stock has meandered since my September 16, 2009 Buy rating at $21.60 per share, but I'm nevertheless reiterating my buy rating. Here's why:

Lowe's has now posted three straight quarters of earnings that were not as bad as expected. While that alone certainly isn't a reason to buy its shares, the stock looks better if you believe, as I do, that both home improvement revenue and more broadly, U.S. home sales (new and existing) have bottomed, providing an adequate tailwind for the stock. Further, any higher-than-expected store traffic in 2010 will be a bonus. The First Call FY2009/FY2010 EPS estimates for LOW are $1.22 to $1.35.
Finally, technically, Lowe's stock chart looks like its share are just biding their time, which can be typical at year end as some institutional investors take profits and others add to their positions modestly, with larger position buys likely in 2010. Hence, if you wait until the new year to buy LOW, that may be too late. By then, I wouldn't be surprised to see shares of LOW trading at $27 or $28.

Stock Analysis: Lowe's is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 100% position in LOW's now. Sell/Stop Loss if you were to buy shares in this company: $14.50.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.


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