Why Investors Should Love Lowe's (NYSE:LOW) Stock There's clearly a lot for investors to love about Lowe's stock, and we've put together a brief overview of some of the reasons why it's a buy below. L...

Things weren't looking so hot for Lowe's (NYSE: LOW) earlier this week after Home Depot's same-store sales growth disappointed and fell for the first time in two years during Q2. However, if the price action for Lowe's stock following the company's latest earnings release is any indication, Wall Street is certainly still interested in adding shares. The stock has popped over 11% following the report and looks like a strong buy for several reasons.

The world's second-largest home improvement retailer is going through somewhat of a transitional period that should lead to lucrative market share gains over the next few years as the company invests in its digital sales channels and revamps many of its retail stores. Lowe's is also benefitting from secular trends right now including heavy consumer home spending that makes it a very attractive specialty retail stock to add to your portfolio.

There's clearly a lot for investors to love about Lowe's stock, and we've put together a brief overview of some of the reasons why it's a buy below. Let's take a deeper look at what makes this home improvement leader truly stand out.

A Strong CEO Goes a Long Way

Back in 2018, current Lowe's CEO Marvin Ellison took over a company that was in need of change. He acted quickly to completely overhaul the company's C-suite, developed a plan for improving how the company operates its stores and focused on improving the retailer's technological capabilities. Those changes have been paying off in a big way, as the company now has better business analytics, a stronger website and digital sales channel, and improved employee morale at the company's 1,973 retail stores. It goes to show investors just how valuable a great CEO is, particularly in the highly competitive retail industry.

This is a big reason why investors should be attracted to Lowe's stock, as Marvin Ellison clearly has the experience and vision to take this company to new levels of success. Keep in mind that Mr. Ellison spent years improving the customer experience and operational efficiency at Home Depot, which is certainly serving him well thus far. Investors should anticipate higher profit margins and more market-share gains over the long term and feel comfortable owning shares of a company with such a strong leader at the helm.

The Golden Age of Home Improvement?

As we mentioned earlier, Lowe's is benefitting from secular trends that have accelerated following the global pandemic. DIY project spending skyrocketed last year as people were forced to spend a lot of time at home, which was certainly a nice boost to the company's revenue in the near term. Although this pandemic-driven boost in DIY spending won't last forever, there are other trends like the rise of remote work and a red hot housing market that should continue to boost this company's profitability going forward.

There's a good chance that we are currently experiencing the golden age of home improvement projects, which is another reason why this stock is a great pick. The company anticipates that it will take years for the supply of homes to meet projected demand in the real estate market, which means the trend in rising home prices should lead to steady home improvement spending as more homeowners view it as an investment. Also, keep in mind that in addition to DIY products, Lowe's offers professional customers plenty of products as well. These are people like construction and maintenance workers who look to Lowe's for supplies, and the PRO segment of the company's business grew 21% year-over-year in Q2.

Rock Star Q2 Earnings Report

Finally, investors should be attracted to Lowe's stock given the company's penchant for delivering quarter after quarter of rock star earnings reports. The company just delivered a 14% year-over-year increase in Q2 EPS to $4.25, beating the consensus estimate and sending shares rallying following the release. This is par for the course for Lowe's, as the company has beat EPS estimates in 9 of the last 10 quarters. That type of consistency is a testament to how well-run the company is, which is something that investors love to see.

Although Lowe's did report a 1.6% decrease in comparable sales, investors should take solace in the fact that this was not as bad as the consensus estimate. It's also worth noting that U.S. consolidated comparable sales were up a staggering 32% on a two-year basis. The company also reported 7% year-over-year online sales growth, which is very impressive considering the frenzy of buying that occurred last year during the pandemic. The bottom line is that this was a very solid earnings report that should make investors interested in adding shares, particularly since the company raised its fiscal 2021 outlook.