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Excerpt from our One Page Barron's Summary (receive it weekly by email by signing up here):

Home Depot, Lowe's Are Poised To Nail Down Gains by Christopher C. Williams

Highlighted companies: Home Depot (HD), Lowe's (LOW)
Summary: Home Depot’s shares have dropped 13% ever since its current CEO Robert Nardelli took the reins six years ago, but there are plenty of reasons to hold on tight. HD vs LOWEarnings per share are up 140% since 2000, yet Home Depot's shares trade for only a dollar more now than they did in 2004, and competitor Lowe’s are standing still from the start of '06. Over the past year, Home Depot shares are down 1.4%, while Lowe’s has dropped 7.2%. Barron's remains positive on both stocks. Once the housing market hits bottom, as many analysts believe it is close to doing, the only way is up. "The stock screams 'very statistically cheap' on earnings, book value, cash flow and sales," says Todd Lowenstein of HighMark Value Momentum fund, who recently bought Home Depot shares, while investor Warren Buffett added to his investment in Lowe's in the third quarter. Although ‘07 same-store sales are expected to drop 2%, they could rebound in ‘08, as consumers return to spending on home improvement. The chains sense this positive future, and are investing in more space, new additions to inventory and plans for overseas expansion. Two looming possibilities could prove profitable to Home Depot investors; a proxy fight may be initiated by Relational Investors, which owns about 1% of the chain, and a leveraged buyout, although unlikely, is not out of the question. In the case of a buyout, shares would rise from a current 40 to an estimated 45 to 58. Barron's: "Investors, fasten your tool belts."
Related: Shareholder Pressures Home Depot to Form Independent Committee to Explore Strategic Alternatives, Don't Scapegoat Bob Nardelli for Home Depot's Stagnant Stock, Home Depot's Dividend Increase: Not What Bob Nardelli Wants You To Believe, David Strasser's Long Case For Lowe's Corp

Source: Share Improvement in Store for Home Depot, Lowe’s