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Investors looking for companies that may benefit from the housing recovery should take a close look at home improvement store chains, Home Depot (HD) and Lowe's (LOW). In the last year, the stocks of the two companies have been up sharply, with Home Depot up close to 70% and Lowe's close 40%. But which stock is a better bet for the future?

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Home Depot. Though the company commands a higher valuation than Lowe's in terms of forward PE, it beats Lowe's in terms of operating margins, and revenue and earnings growth, which reflect four areas of strength:

First-Mover Advantage. A pioneer in the home improvement area, Home Depot occupies prime locations that offer customer convenience.

Scale: Home Depot is 1.5 times larger than Lowe's with $71.38 billion in revenues versus $51.8 billion.

Bundling: Home Depot has been a pioneer in bundling products with services, making it easier for customers to find out the materials they need for DIY projects or hire professionals for DIFM projects.

Culture: From its early days, Home Depot has fostered a corporate culture that of the "inverted pyramid, " which puts customers and sales associates first.

Home Depot and Lows Financials

Company

Home Depot

Lowe's

Forward PE

16.90*

13.53**

Operating Margin

10%

7.39%

Quarterly Earnings Growth

12.40%

-10%

Quarterly Revenue Growth

1.70%

-2%

Dividend

2%

2.30

*January 29, 2014

**February 3, 2014

Source: Yahoo. Finance.com

Source: Home Depot Or Lowe's?