Some sectors of the market are competitive with a number of companies working hard for market share. More mature industries often have fewer competitors, but can increase their business by improving the experience for customers.
That’s especially true when it can do so without significantly raising prices or otherwise having a trade-off. By improving customer experience, a company can build long-term brand loyalty. That’s hard to measure in terms of a dollar valuation, but it does make a great company stand out.
The past few years has seen the retail space get more competitive as brick-and-mortar firms have moved to also compete online. Home improvement retailer Lowe’s (LOW) is pushing for more market share online, by offering same-day shipping on its products.
The company is a bit behind its main competitor, Home Depot (HD) in that space. But Lowe’s has focused less on the contractor market and more on providing better products that homeowners can complete without a professional.
Action to take: Lowe’s is similarly valued to Home Depot, with both stocks going for about 20 times earnings. Lowe’s has a lower dividend, at 1.9 percent, but improving growth could lead to higher returns there over time. Those factors make Lowe’s attractive at current prices or on any drop.
For traders, shares should continue to trend higher. The October $240 calls, last going for about $6.95, could deliver mid-double-digit returns in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.