Lowe's

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The recent housing market rebound has had a halo effect on any stock with a tie-in to housing or building, so it should come as no surprise that home improvement retailer Lowe's ( LOW) has been attracting more investors' eyes lately. Hedge funds haven't been immune to the draw; last quarter, hedge fund managers picked up 2.87 million shares of Lowe's, boosting their total ownership of the stock by 36%.

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A couple of factors make Lowe's stand out from the crowd. For starters, the firm has enjoyed slow but steady top line growth over the last few years, the result of consumers' willingness to spend on home improvement projects in place of spending on new homes. During the recession, the firm invested in better merchandising and increasing the presence of its store brands, two factors that have helped the company hang onto impressive margins for the retail industry. While Home Depot ( HD) has gotten more visibility from its conspicuous post-recession turnaround, Lowe's probably deserves more credit for staying consistently attractive.

Financially, Lowe's sports a balance sheet that could be a lot worse. While the firm has a net debt position, that's par for the course for a big-name retailer. More important, its financial obligations are easily covered by cash generation, and LOW's financial health doesn't look in question right here. As home improvement stocks continue to get bid up, Lowe's investors will keep getting rewarded for their patience.

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