This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
There are many contrasts between The Home Depot (NYSE: HD) and Lowe's (NYSE: LOW), both of which sell a broad range of tools, fixtures, fittings, garden supplies, and construction materials to do-it-your selfers and professional contractors alike. Home Depot is the original big-box category killer of a hardware store that displaced many a mom-and-pop shop, as well as its predecessors, like Builders Emporium. Lowe's, the new kid on the block has been growing like mad with Home Depot's business in it's cross-hairs.
Both companies have been suffering mightily in the face of the housing slump and the crushing financial markets. Eventually, recession or not, both companies will see their revenues improve as the economy works through it's nightmarish problems.
I've received a few chuckles for investment directions I've suggested in the past, but if you care to review a couple of my previous generalities, I believe that my record has held up fairly well.
I submit for approval the following investment angles for the balance of 2008 and possibly beyond:
Have I suggested investments in water holdings? Yes, I do believe that I have. I believe that going long in water stocks could be an investment hedge of the decade. I also suggest a look into the desalination technology from General Electric Co. (NYSE: GE).
I'd think it's a good idea to stick with the railroads, such as Burlington Northern Santa Fe (NYSE: BNI). I claim that, with all things given, for now, railroads can't fail. Conversely, I think it's a good time to back away slowly from trucking. I think misery lies ahead there.
UBS initiated Interpublic Group (NYSE: IPG) and Omnicom Group (NYSE:OMC) with Buy ratings and an $11 target and $62 target, respectively. The firm views valuation as attractive.
Hottest Stocks of 2008 (so far) Some surprising names have performed well this year--and they have room to run. They include Allied Irish Banks, Home Depot, Lowe's, American Express, Time Warner Cable, Vulcan Materials and Verizon. The Hottest Stocks This Year - Morningstar Stock Strategist
Worst Places for Homeowner's Debt It's no secret that homeowners with subprime mortgages have taken a beating. Next up: those who have combined their mortgages with home equity loans, second loans or both. These combinations spell especially bad news for homeowners with the worst city being Sacramento. Other cities with high homeowner debt include San Diego, Washington DC and Colorado Springs. Worst Cities For Homeowner Debt - Forbes.com
Home Depot, Inc. (NYSE: HD) will be trimming its human resources staff soon, according the the company. The largest home improvement retailers in the U.S. seeks to trim its HR staff by a total of 1,000 employees, with the goal of having more help on its sales floors instead of on administrative tasks.
Home Depot officials said that it won't be handling human resources issues on a store-by-store basis any longer, opting instead to handle employee HR from a district-wide perspective. It will shift HR tasks mostly to telephone-based support and will be adding 200 people for a new human resources call center, according to the company.
Is this a wise move? It will save the retailer costs from a headcount burden at each store that may not be the best use of its labor force, but then again, having HR in-store does probably have an advantage. Maybe it's not enough from a cost perspective. If the retailer can shift more headcount to the sales floor, that is always a good thing.
In addition to the HR personnel moves, the retailer said that it will shift stocking crews at some of its stores from the overnight shift to the day shift, as there just isn't enough work for some overnight crews at this time. Since the mortgage mess continues to spook the entire country at this time, home improvement retailers are seeing a good brunt of the mess.
Even in these uncertain times, there are stocks that have far better odds of outperforming than others. Yup, for a minute, just forget about all the different industries, economic guessing games, earnings-valuation time lags and the rest of the market randomness that makes stock picking so difficult and "market gurus" so ineffective. Focus instead on the incredibly telling stock charts of these companies:
It may not occur to customers, but big retailers are willing to negotiate prices. That would seem to make intuitive sense in a period when shoppers are a scarce as hen's teeth.
According toThe New York Times, "Shoppers are discovering an upside to the down economy. They are getting price breaks by reviving an age-old retail strategy: haggling." The paper says this kind of transaction is now common place at Best Buy (NYSE: BBY), Circuit City (NYSE: CC), and Home Depot (NYSE: HD).
There is a real danger to the practice. While it may keep customers in stores and get rid of inventory, the retailers are already faced with tight margins. Selling products at or near cost may not help large stores. It may hurt them by encouraging large portions of their customer bases to ask for much better prices. By going from chain to chain, a smart buyer can work a price way down.
National chains may want to look at the math. Letting customers walk out the door may be better than driving a culture where everyone thinks he can get a deal.
Douglas A. McIntyre is an editor at 247wallst.com.
Lumber Liquidators (NYSE: LL) is the largest specialty retailer of hardwood flooring in the United States. Product lines include prefinished domestic and exotic hardwoods, engineered hardwoods, unfinished hardwoods, bamboo, cork, and laminates. Altogether, the firm offers 150 varieties of flooring. These are sold from 124 stores in 44 states, via catalogs, over the Internet and through a Virginia call center. Competitors include Home Depot (NYSE: HD) and Lowe's Companies (NYSE: LOW).
The firm surprised the Street last week, when it reported Q4 EPS of 12 cents and revenues of $105.5 million. Analysts had been expecting ten cents and $102.2 million. In discussing the solid numbers, the CEO pointed to growth-oriented infrastructure investments and a higher-margin merchandise assortment. Management also guided FY08 EPS to 70-78 cents (73 cent consensus) and FY08 revenues to $475-$490 million ($483.27M consensus).
After hitting a one-year high of $41.19 in June, the stock hit a one-year low of $23.77 in January. This morning, HD opened at $26.68. So far today the stock has hit a low of $25.81 and a high of $26.88. As of 12:45, HD is trading at $25.96, down $0.80 (-3.0%). The chart for HD looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
This year, the International Trade Commission is set to issue rulings on whether Samsung and Nokia Corporation (NYSE: NOK) have infringed patents from InterDigital Inc (NASDAQ: IDCC). If InterDigital, who licenses its patents to iPhone maker Apple Inc (NASDAQ: AAPL), wins, fees from the deals could double its revenue over the next few years, the Wall Street Journal contended.
According to FDA commissioners, the New York Times reported that Baxter International Inc's (NYSE: BAX) critical blood thinner heparin, which has been linked to nearly 20 deaths and whose base was created in China, contained a "possibly counterfeit" ingredient that "mimicked the real drug."
In his opening arguments in the state of Alaska's lawsuit against Eli Lilly & Company (NYSE: LLY), an attorney for the state alleged the drug maker failed to warn doctors and patients of dangerous side effects associated with its drug Zyprexa, the Associated Press reported.
It is alarming to me that the same people who screw up the economy (or stand by watching) are the ones that are now promoting the remedies. They have proven without a shadow of a doubt that this is not their strong suit. The proposed economic stimulus package has bi-partisan support and calls for an estimated $156 billion of tax rebates ranging from $500 to $1,000 (+ $300 for each child) that might show up in May.
If we are going to add on to our already humungous joke of national debt, than I want to invest this capital in something that will bring a higher return on invested capital (ROIC) than the paltry one time mad money. That expenditure should be for national infrastructure projects like roadways, bridges, tunnels, and waterways.
We have all heard about the poor condition of our national infrastructure and the hundreds of billions of dollars of repair work and replacement that is desperately needed.
This alternative would bring visible results that every single person in the country would benefit from and improved linkages always stimulate economic growth. Road improvements even reduce fuel consumption by shortening routes and reducing friction both strategically and physically.
After home improvement retailer Lowe's Cos. (NYSE: LOW) posted a 33.4% decline in its fourth-quarter profit yesterday, it was its main competitor Home Depot Inc. (NYSE: HD)'s turn to step up to the plate and impress Wall Street. As Trey Thoelcke discussed, the world's largest home improvement store chain managed to top estimates only once in the past six quarters, and current earnings numbers were not too encouraging either.
Home Depot reported that its quarterly profit slipped more than 27% to $671 million as the slumping U.S. housing market brought the first annual decline for the company's sales. The retailer posted earnings of 40 cents a share, falling short of analyst estimates for a profit of 43 cents a share.
Looking at revenue, Home Depot saw an increase of 1.5% to $17.66 billion, up from $17.4 billion a year earlier, as the largest U.S. home-improvement retailer benefited from an extra week during the quarter. Excluding that, sales would have dropped 4.7%. Analysts forecast revenues of $18 billion for the quarter, according to Thomson Financial.
7 Recession-Proof Places to Retire From college towns to big cities, these places can help retirees weather downturns. They include Gainesville, FL, Ithaca, NY, Orlando, Pittsburgh, Portland, Ore, San Antonio and Tucson. 7 Places to Retire During an Economic Downturn | SmartMoney.com
Trader Joe's Recipe for Success By limiting its stock to specialty products at low prices, Trader Joe's sells twice as much per square foot than other supermarkets. Trader Joe's Recipe for Success - BusinessWeek
Best & Worst Certified Used Cars Savvy buyers are learning more about the value of certified pre-owned cars. Here are the five best and the five worst. Among the best are the Honda Accord, Toyota 4Runner, Acura TL, Subaru Impreza and Lexus GS. The worst include the Saturn Relay, Jeep Grand Cherokee, Pontiac G6, Volkswagon New Beetle and Mercedes-Benz E Class. The Best And Worst Certified Used Cars - Forbes.com
Buy Toilet Paper, Save the Planet Buy a MegaRoll of Charmin bathroom tissue ("It's 4 Single Rolls in 1!"), and you will help save the planet. You can also score points for environmental responsibility by cleaning clothes with Tide Coldwater, or wrapping your baby's behind in Pampers. So, at least, says Procter & Gamble, the $77-billion-a-year consumer products giant. Buy toilet paper, save the planet - FORTUNE
Jack LaLanne at 93: Physically and Financially Fit He's known as the father of modern fitness, but Jack LaLanne is also a natural businessman. Today, at age 93 and living in Morro Bay, Calif., he's still at it, with an Internet radio show and commercials for juicers that run throughout the world. Though it's all made him wealthy -- by the 1980s, he had more than 200 health clubs, which he later sold to Bally -- he insists he's more interested in helping people than making money. Go inside the amazing life of this fitness guru. LaLanne at 93: Physically and fiscally fit -Bankrate.com
TheStreet.com's Jim Cramer says it could be part of a strategy to pounce when the economy sagged. Lowe's can take the pain; Home Depot can't.
Maybe Lowe's (NYSE: LOW) (Cramer's Take) sees what we saw this morning: A Home Depot (NYSE: HD) (Cramer's Take) that's a shadow of its former self. Maybe LOW is pulling a Verizon (NYSE: VZ) (Cramer's Take) and just going out to destroy the competition with lower rates and short-term hits to performance.
Yesterday I was torn between what really drove up the price of Lowe's: the January low point with February showing some improvement, or an overall belief that the early cycle is starting and the economy has bottomed courtesy the Fed rate cuts. The reaction last night to Nordstrom (NYSE: JWN) (Cramer's Take) was similar: terrible earnings but hope that things will get better. It's is now well above where it hit its low and it is hard for me to believe that it could go back there.
You couldn't tell which theory was winning out for either Lowe's or Nordstrom because I am sure you had buyers of both plus the ubiquitous short-sellers who lurk everywhere and are prone to cover on a moment's worth of positive price action (as we saw in Goldman Sachs (NYSE: GS) (Cramer's Take) yesterday before a new round of estimate cuts, courtesy special purpose vehicles that some alleged cognoscenti will claim they saw coming).
This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
I've received a few chuckles for investment directions I've suggested in the past, but if you care to review a couple of my previous generalities, 
.gif){kind=logo}
.gif){kind=logo}
It is alarming to me that the same people who screw up the economy (or stand by watching) are the ones that are now promoting the remedies. They have proven without a shadow of a doubt that this is not their strong suit. The proposed 
After home improvement retailer 
The Wal-Mart Weekly: Examining shareholder resolutions, Part 2
Earnings expectations for JC Penney, Nordstrom, Macy's, Abercrombie and others
Comfort Zone Investing: Financial stocks: Is the worst over yet?
