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Ross Stores operates as an off-price apparel and accessories retailer with the majority of its sales derived from its Ross Dress for Less banner. The firm opportunistically procures excess brand-name merchandise made available via manufacturing overruns and retail liquidation sales at a 20%-60% discount to full prices. As such, its stores are often filled with a vast array of stock-keeping units, each with minimal product depth that creates a treasure hunt shopping experience. The firm’s more than 1,750 Ross Dress for Less stores are primarily located in densely populated suburban communities and typically serve middle-income consumers. Ross also operates about 350 DD's Discounts chains targeting lower-income shoppers.

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 primarily targets retail do-it-yourself (around 75% of sales) and do-it-for-me customers, but has expanded its commercial and professional business clients to 25% from less than 20% in the past six years. 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.

While a recent 70 basis point increase in 30-year mortgage rates is a significant risk for the housing market, builders are hopeful that the Trump administration will ease regulations that inhibit home building. The National Association of Homebuilders/Wells Fargo Housing Market Index rose for a third month in November, adding three points to it 46. Expectations for the next six months jumped by seven points to a solid 64, which is the highest since early 2022. A reading below 50 indicates that more builders see conditions as poor than good, so there is plenty of room for improvement in the headline number. "With the elections now in the rearview mirror, builders are expressing increasing confidence that Republicans gaining all the levers of power in Washington will result in significant regulatory relief for the industry," said NAHB Chairman Carl Harris. To be sure, it may be hard for sentiment to keep rising unless mortgage rates fall back towards 6%. This week the 30-year was back up to 6.8% according to Freddie Mac. On Tuesday, the Department of Housing and Urban Development and the Census Bureau reported that housing starts in October were down about 4% from a year earlier, to an annual rate of 1.31 million. Our estimate was 1.29 million. Starts peaked at 1.8 million in April 2022, just a month after the Fed's first of 11 rate hikes. The National Association of Realtors reported Existing Home Sales of 3.96 million (SAAR) for October, which was an increase of 2.9% from October 2023. Our estimate was 3.90 million. On November 26, we expect the Commerce Department to report October New Home Sales of 705,000 (SAAR), up almost 5% from a year earlier but down from 738,000 in September. The S&P/Case-Shiller National Home Price Index rose 4.2% in August. We expect growth to soften to 4.0% for September. The Zillow Home Value Index rose by 2.6% in October. We remain upbeat on the sector because demographics point to strong demand amid a decades-long shortage of affordable homes.

PDD Holdings is a multinational commerce group that owns and operates a portfolio of businesses. PDD aims to bring more businesses and people into the digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD has built a network of sourcing, logistics, and fulfillment capabilities that support its underlying businesses.