The Motley Fool

Fool's Take: Building with Lowe's

Home prices have reached a point where many people simply can't afford to move from renting — or living with others, like their parents — to buying. With the housing market already facing this headwind, the problem worsened when the Federal Reserve began raising interest rates to fight high inflation. Now, not only are homes prohibitively expensive, but taking out a mortgage costs more than it used to, as well.

This dynamic is terrible for housing-related stocks like Lowe's; its stock was recently down roughly 6% over the past year. It's highly likely to survive the current headwinds, though. After all, people who stay in their homes rather than move will continue to upgrade and change their abodes. This may include more do-it-yourself work but often involves hiring a professional. Lowe's is increasingly focused on the professional customer segment, which could, in time, give it a growth boost.

Investors buying in now can enjoy a 2.2% dividend yield while they wait for brighter days. And Lowe's now has a record of at least 25 consecutive annual dividend increases.

The stock seems reasonably priced now, too, with a recent forward-looking price-to-earnings ratio of 17, roughly on par with its five-year average. Long-term, income-focused investors might want to give Lowe's a closer look.

Fool's School: HSAs versus FSAs

Healthcare is a major expense for many people. Indeed, according to the health-policy nonprofit KFF, total annual premiums for family coverage including employers' contributions recently averaged $28,303, about 5%, higher than in 2025. The size of the jump was especially bad because wages only grew by 3.7% over that period. And that doesn't even account for considerable out-of-pocket spending.

Fortunately, there are a few ways to save on those expenses — such as flexible spending accounts, FSAs, and health savings accounts, HSAs, which may be offered by your employer. Each lets you put aside pretax money into an account you can use to pay for qualifying health-related expenses throughout the year.

If you put money into such an account, it's deducted from your taxable income and reduces your tax bill. Some of the many qualifying expenses are doctor visits, hospital stays, prescription drugs, over-the-counter treatments, preventive care, dental work and physical therapy. The accounts have some differences, though. For one thing, FSA money is generally there on a use-it-or-lose-it basis, while HSA money can remain in your account for years and can even be invested. Better still, money that grows and accumulates in an HSA can be withdrawn at age 65 or later and can be spent on anything. Thus, an HSA can double as a retirement savings account. However, you need to have an eligible, usually high-deductible, health plan to get an HSA.

Ask the Fool: Low P/E Ratios, Explained

What does a low P/E ratio mean? — I.D., Paducah, Kentucky

The price-to-earnings ratio is a rough valuation measure that shows you how much you'd be paying for each dollar of earnings at the current stock price.

To calculate it, divide a stock's current price by a year's worth of its earnings per share, or EPS. (Usually, the trailing 12 months of EPS is used, but it can also be insightful to use the expected EPS for the coming year.) So, if Buzzy's Broccoli Beer (ticker: BRRRP) is trading at $80 per share and its trailing EPS is $4, its P/E ratio is 80 divided by 4, or 20 (some refer to this ratio as the stock trading "at a multiple of 20"). That means you'd be paying $20 per dollar of earnings.

In general, the lower the P/E, the more attractively valued a stock is. But don't mix apples and oranges. Some industries, such as software, tend to have high P/E ratios, while more capital-intensive businesses, like industrial manufacturers, tend to have lower ones. It's best to compare a stock's P/E with those of its peers and with its own historic multiples.

Never look at just a P/E, though. Always assess a wide range of measures, and read up on the company's strengths, weaknesses, risks and opportunities.

My Smartest Investment: Won with real estate

My smartest investment has been buying real estate. I've been a Realtor for 56 years. My first stock investments declined in value, with some falling to zero. I also bought a dozen single-family and two-family homes; all tripled in value, and all are paid off. The income is great, and the value keeps increasing. — T.B., via email

You certainly did well — congratulations! However, real estate investments aren't always the best choice. For one thing, they require much more of you than stock investments do. You'll have to maintain and repair them and pay taxes and insurance, as well — and probably borrow money to buy them. You could hire a management company to do some of the work involved, but that will cost you. Real estate values won't always go up, either; much depends on where your properties are. Many investors will do well buying properties to rent out, but others will struggle. It likely helped that you're a Realtor, with plenty of real estate knowledge.

Meanwhile, stocks can be terrific long-term investments. If you're not confident choosing individual stocks, you can always invest in one or more index-based exchange-traded funds, such as the Vanguard S&P 500 ETF or the Schwab U.S. Dividend Equity ETF.

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