What happened

The stock of Lowe's (NYSE:LOW) outperformed a booming market last month as shares gained 10% compared with a 5.5% increase in the S&P 500 in July, according to data provided by S&P Global Market Intelligence.

The boost added to a broader rally for owners of the home improvement retailer, with shares up 25% in 2020 versus a 22% increase for Home Depot (NYSE:HD) and a 2.2% rise in the wider market.

A couple paint a room together.

Image source: Getty Images.

So what

Neither retailer issued official operating updates last month, but investors pushed both stocks higher on hopes that sales growth has accelerated as consumers focused their spending more on projects around the house during the pandemic.

Shareholders saw the first hints of these gains in mid-May, when Lowe's reported sharply higher comparable-store sales and surging profits through April. At the time, executives suggested the positive momentum continued into the second quarter. Sherwin-Williams (NYSE: SHW) said in late July that it saw "unprecedented" DIY demand in its consumer paint sales in recent weeks. 

Now what

Lowe's Q2 report is set for Aug. 19 and should show higher demand for home upgrades. Key shareholder questions for that announcement include whether Lowe's outgrew Home Depot, which reveals its operating results a day earlier. Investors will be watching for any signs that these retailers' sales gains are tapering off, too, given that the U.S. has entered a sharp recession.

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