Can Lowe’s Remain a Market Leader?

With shares of Lowe’s (NYSE:LOW) trading around $36, is LOW an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for a Stock’s Movement

Lowe’s is a home improvement giant that offers a wide variety of products for maintenance, repair, remodeling, and decorating. With the recent housing bubble collapse, homes are not being sold at the rate they once were, and instead consumers are opting for remodels. Investors are also diving into the real estate investment market and they too need to improve these income properties. Look for Lowe’s to capitalize on this home improvement trend.

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T = Technicals on the Stock Chart are Strong

Lowe’s long-term chart reveals that the stock is now trading near all-time highs. It has recently pulled-back to significant levels, which coincide with previous highs, near $35 per share, where previous resistance should act as support. As of today, the stock is consolidating its gains, a very healthy sign. The Lowe’s price chart is displaying a wonderful uptrend consisting of higher highs and higher lows.

How can a trend be more easily identified? With the use of key simple moving averages. The key simple moving averages are the 20-day, 50-day, and 100-day simple moving averages. The order of these averages, relative to the stock price, and the direction they point should also be taken into consideration. Let’s take a look at Lowe’s key moving averages. As of today, the stock is trading around its rising 50-day and above its 100-day and 200-day simple moving averages. So, although the stock has pulled back a bit, the moving averages are still signaling a strong uptrend…