This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Lowe's is the second-largest home improvement retailer in the world, operating more than 1,700 stores in the United States, after the 2023 divestiture of its Canadian locations (RONA, Lowe’s Canada, Réno-Dépôt, and Dick’s Lumber). The firm’s stores offer products and services for home decorating, maintenance, repair, and remodeling, with maintenance and repair accounting for two thirds of products sold. Lowe's targets retail do-it-yourself (around 75% of sales) and do-it-for-me customers as well as commercial and professional business clients (around 25% of sales). We estimate Lowe's captures a high-single-digit share of the domestic home improvement market, based on US Census data and management’s market size estimates.

Lowe's is the world's second-largest home improvement retailer, with sales of $86 billion in FY24. Based in Mooresville, North Carolina, the company operated about 1,750 home improvement and hardware stores in the U.S. at the end of FY24. Retail selling space was 195 million square feet. Home Decor, which includes appliances and paint, was the biggest merchandise division at 37% of FY24 sales. Building Products, including lumber, was 31%; Hardlines, including tools, seasonal, and lawn & garden, was 29%; Other categories represented just under 3% of sales. About 75% of sales are to individuals and 25% are to maintenance, repair, operations and construction professionals. The states with more than 100 stores at the end of FY24 were Texas, Florida, North Carolina and California. Online sales were 5% of the company's total in FY20 and rose to about 7% at the end of FY21 and 11% in 4Q23. The company's fiscal year ends on the Friday closest to the end of January. Based on the fiscal calendar, FY17 had a 53rd week, which happens about every five years. The FY23 was also 53-week fiscal year. FY25 will end on January 31, 2025.

Tech stocks are leading the Nasdaq higher at midday, and the S&P 500 is headed north as well. That said, the Dow Jones Industrial Average is off by about 250 points and the Russell 2000 is also lower, leading to a bifurcated stock market so far today. The yield on the 10-year Treasury note is down slightly to about 4.43%, gold and Bitcoin are off about 1%, and crude oil prices are rising. On the earnings front, Nvidia (NVDA, up 10%) remains the story of the day after its quarterly profit report once again rocketed past Street expectations. The good news from the AI industry leader is lifting other tech stock as well (DELL, up 7%; SMCI, up 4%).