A Better Alternative to Lowe's and Home Depot Stock?

Home Depot (NYSE: HD  ) and Lowe's (NYSE: LOW  ) reported quarterly results this week, but they're no bargains. Home Depot stock is now fetching 19 times next year's earnings, and Lowe's is trading at a still-high 17 times next year's profit target.

This would be reasonable if the two home improvement chains were cashing in on the housing boom, but they're not. Back out an extra week and Home Depot's sales rose just 4% for the quarter. Lowe's actually posted a surprising dip in revenue. 

Then we have Trex (NYSE: TREX  ) and Lumber Liquidators (NYSE: LL  ) , the wood-alternative decking and hardwood-flooring retailers that posted double-digit revenue growth in their most recent quarters. Yes, those stocks trade at slightly higher multiples, but in this video longtime Fool contributor Rick Munarriz explains why they are worth it and why it might be time to trade in the orange aprons for a better alternative to both Lowe's and Home Depot stock.

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Related Tickers

9/28/2016 4:02 PM
HD $128.27 Up +1.45 +1.14%
Home Depot CAPS Rating: ****
LL $18.21 Up +0.20 +1.11%
Lumber Liquidators CAPS Rating: ***
LOW $71.76 Up +0.26 +0.36%
Lowe's CAPS Rating: ****
TREX $59.64 Up +0.33 +0.56%
Trex CAPS Rating: *****