"Cyclical Weakness Will Eventually Make Home Improvement Stocks Attractive." Duh

It’s no secret the housing sector is a mess. Sales of previously owned homes (which account for 85% of the housing market) are down for the seventh month in eight and single-family housing starts are at a 17-year low. So if you’re Home Depot (HD) or Lowe’s (LOW), the home improvement superstores, you are likely to struggle. However, in this downturn, Wachovia sees a future opportunity.

Wachovia believes the home improvement sector is still weakening and still sees risks to the estimates for these companies, but is becoming more intrigued in the shares as they go down (intelligent). The firm maintains MARKET PERFORM ratings on both Home Depot (HD) and Lowe’s (LOW), but as the cycle plays itself out, Wachovia can see a possible play in this sector (duh).

Fair to say (we hope) that Home Depot and Lowe’s aren’t going out of business. So at some point the stocks will bottom. We’re glad Wachovia thinks similarly, but we’ll be more grateful if/when they tell us when that bottom is.


NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.