Forum Archive Index - September 2000

[Mike Hudson <MHudson@placemakers.co.nz>]

Back from Singapore but after looking what's happened to the market in the
mean time I wish I had stayed away.  Fascinating place in economic terms;
amazing how a small country with no mineral resources and that has to import
100% of its oil, 95% of its food and 50% of its water can turn itself form
the Third World to the First World in 30 years - just the opposite of NZ
when you come to think of it. However I digress.

I also have followed Home Depot with interest over the years particularly
after a study trip we took to the States and Canada a few years ago during
which we visited a lot of stores and spent time with senior management of
Home Depot, Lowes, Builders Square, 84 Lumber and Beaver Lumber.

The company that impressed me most was Lowes (NYSE LOW) who are the number 2
to HD in the home improvement business in the US. I liked their stores and
their style more than HD. The down side is that they are number two and
don't have the sheer scale of HD.

 HD is currently at $53 with e.p.s of $1.12 and a PE of 49 This strikes me
as being very high  for a retailer (you are earning only 2% on your
investment at this multiple)  and suggests that they need to at least
quadruple their earnings in the next few years to justify it. LOW at $47
with e.p.s of $2 and a PE of 24 could be worth a look although there is some
question over their 3rd quarter earnings (denied by the company).

This is just a gut feeling on my part as I haven't researched either for a
while.

Disclosure: own neither HD or LOW

Cheers
Mike H
 



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