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Garnry: Home Depot and Lowe's build on improving US housing sector

Momentum in the US housing market continues to build, helping companies like Home Depot and Lowe's who are reporting earnings this week. Saxo's Peter Garnry says he expects strong results from both, with Home Depot's profits likely to be up around 15%, against a revenue gain of 3.5%.

Garnry says the success is also being driven by cost cutting and productivity gains but he acknowledges there's only so much that can be achieved. He also believes wages will have to rise in the next one-and-a-half to two years which could hurt profits.

It's still an industry that Peter favours but he thinks investors should only be exposed to it for a maximum of two years. He expects momentum in the housing sector to fade, so this is not a trade for the longer term investor.

02:22 minutes
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