Home Depot: A Pivotal Buying Moment Is Here (Rating Upgrade)

Summary:

  • Home Depot stock has significantly underperformed the S&P 500 since my late December update. However, I also indicated that fears of a housing crash were overblown.
  • That thesis has played out accordingly, as the US consumer remains remarkably resilient, underpinning the strength of the US economy.
  • HD’s underperformance is likely due to its premium valuation and growth normalization from an unsustainable pandemic-driven surge.
  • Despite that, steep pullbacks have presented astute dip-buying opportunities at well-supported levels.
  • I explain why the current levels are expected to see more dip-buyers return and help HD bottom out from here.

Home Depot Profits Dip, But Exceeds Expectations

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I last updated The Home Depot, Inc. (NYSE:HD) investors in late December 2022 that fears over the housing market were “overblown.” HD bottomed out in September 2022, in line with the broad market, and hasn’t looked back. However, I also


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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