As a general principle, trade wars are unproductive for the retail industry. After all, it’s the consumer that really absorbs the higher prices of tariffs and their retaliatory responses. Such a framework places home improvement retail giant Lowe’s Companies (NYSE:LOW) in a difficult position. While these stalwarts benefit from pricing power and economies of scale, at some point, they must pass down higher costs to their customers.

Nevertheless, it’s also important to recognize that Lowe’s core business enjoys durable demand flows. Stated differently, pipes don’t break when it’s economically convenient. Indeed, many will point to Murphy’s Law and bemoan that structural failures erupt when you least want them to. Fortunately, for such dilemmas, Lowe’s provides a range of products to help both customers and contractors get back on their feet.

Adding to the positive vibes for LOW stock, the underlying company topped analysts’ expectations for quarterly earnings and revenue last month. Even better, management stated that its sales slump should end later this year.

For the current fiscal year 2026, experts anticipate that the home improvement retailer could post a top-line print of $84.59 billion. If so, that would only represent a modest 1.1% lift from the prior year. However, circumstances may improve more conspicuously in the following year, when sales are projected to reach $87.46 billion. That would be up 3.39% from estimated fiscal 2026 revenue.

At this moment, LOW stock trades hands at 1.58-times trailing-12-month (TTM) sales. While this is elevated from last year’s print of 1.39X, back in late October last year, the multiple had averaged 1.79X. Based on projected fiscal 2026 revenue, shares are trading at a multiple of 1.55, which is decent.

Still, the most compelling reason to consider LOW stock could be trading activity among smart money players.

Options Flow Suggests a Floor in LOW Stock

One screener that retail investors should familiarize themselves with is options flow. A step above unusual options activity, options flow exclusively showcases big block transactions within the derivatives market — transactions that typically only institutional investors place. Last Thursday, there was a massive influx of activity that warrants your attention.

On March 20, Barchart’s options flow screener broadcasted net trade sentiment on the day as reaching $3.226 million. That’s highly unusual, especially since in the other days of last week, net trade sentiment never exceeded six digits in either direction (bullish or bearish).

What’s more fascinating, the most bullish trade on that fateful Thursday was for 1,012 contracts of sold $260 puts expiring April 17 of this year. To recap, put holders have the right (but not the obligation) to sell the underlying security at the listed strike price. On the other hand, put sellers must buy back the security if the other party exercises their options, a process known as assignment.

In other words, put sellers underwrite the risk that the security in question won’t fall. But if it does, the strike price minus the premium received effectively represents the price at which sellers would be comfortable owning the target stock.

For Lowe’s, this “magic” price is approximately $226.45. Given that there appears to be technical support at the $222 level, the sold puts lend credence to the idea that LOW stock might not dip much from here. Subsequently, buy-and-hold investors may be looking at an ideal entry point at this juncture.

— Josh Enomoto

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Source: Money Morning