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Tickers in this Article: LOW, HD, FDX, UPS, KO, PEP
Following the long line of what appears to be signals of cautious optimism, Lowe's (NYSE: LOW) delivered third-quarter numbers that were off from the same quarter a year ago, but the comparable-store sales numbers improved slightly to minus 7.5% compared to a 9.5% decline from the second quarter.

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Hope Or False Bottom?
Indeed, the worse the comparable numbers are, the easier it is to deliver results that look optimistic. Lowe's earned $344 million in Q3 2009, or 30% less than the same period a year ago. A 3% sales decline over the same period looks fantastic when you consider the dire straits facing the housing industry. I've always felt Lowe's management is one of the best in the business, and it continues to view the future with muted optimism. Continually high unemployment and declining home values are two significant factors that affect company sales. (Learn about the effects of unemployment in The Impact Of Unemployment and Planning For Unemployment.)

Profit From The Pain
Patient investors should see the silver lining today for Lowe's. The company is in the enviable position of operating in a virtual duopoly along with Home Depot (NYSE: HD). While this terrible environment hurts the numbers today, the results on the back end when things eventually improve will be even more impressive as the company is well-positioned to take additional market share from smaller, more inferior competitors. Very few companies enjoy such an entrenched competitive advantage with only one main competitor sharing an entire market.

In beverages, you have Coca-Cola (NYSE: KO) and Pepsi (NYSE: PEP); in global package shipping you've got FedEx (NYSE: FDX) and UPS (NYSE: UPS). Businesses like these have historically emerged from economic depressions and recessions bigger, stronger and with fewer competitors.

An opportunity to buy such a wonderful business as Lowe's at 17 times earnings, knowing the possibility that those profits could be significantly higher over the next five years, should not be ignored. You don't need to be an investing expert to deliver solid long-term results.

Be Realistic
Betting on quality names requires patience, as these businesses deliver value by growing over the long-term. The other factor is paying a good price, and the best prices appear during weak periods. Do these two things, and you're likely to have very respectable results.

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