Run In Home Depot And Lowe's Not Over Yet, Says Oppenheimer

In a report published Thursday, Oppenheimer analyst Brian Nagel argued that investors should "keep buying" shares of

and

despite shares rising 10 percent and eight percent, respectively, thus far in 2015. "Recent data suggest solid, if not improving, consumer spending trends in the US," Nagel wrote. "Significant slack remains at Home Depot and Lowe's and in the US housing recovery. Prospects for a continued strong US dollar should keep market participants interested in well-positioned domestic stock plays." Contrary to conventional market wisdom, shares of Home Depot and Lowe's tend to perform well and outperform the S&P 500 through the early to mid-stages of Fed tightening cycles. The analyst suggested that Home Depot and Lowe's "only languish" as hikes to the Fed funds rate taper and investors should focus upon the potential for economic weakness. Despite "operational struggles" at

, the retailer still manages to control more than $4 billion in appliance sales. Home Depot and Lowe's are both positioned to capture share in the appliance and tool categories as "structural limitations" at Sears continue to undermine its ability to drive or even hold sales, according to Nagel. Finally, Nagel noted that Lowe's operational margins remain below prior peaks and "depressed" versus those of Home Depot. However, as the U.S. housing market continues to recover, less productive units at Lowe's could become sales and profit drivers for the company. Shares of Home Depot are Outperform rated with a price target raised to $133 from a previous $115. Shares of Lowe's are Outperform rated with a price target raised to $85 from a previous $77.