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Home Depot: Riding The Surge In House Price

Jan. 02, 2022 2:58 AM ETThe Home Depot, Inc. (HD)15 Comments
Cappuccino Finance profile picture
Cappuccino Finance


  • U.S. home prices are rapidly rising, and Home Depot is in a great position to take advantage of the trend.
  • Their revenue has been rising steadily over a couple of decades, and the trend will continue for the foreseeable future.
  • Thanks to their supply network and relationships with vendors, their margins are holding up nicely.
  • Their cash generation ability is outstanding ($14 B, TTM cash from operation).
  • I expect 15-20% upside from the current level.

The Home Depot Store

patty_c/iStock Unreleased via Getty Images

Investment Thesis

Home Depot (NYSE:HD) is the world's largest home improvement retailer based on revenue. They have over 2,000 stores located across North America. With rising home prices, homeowners are motivated to remodel their homes, which in turn

This article was written by

Cappuccino Finance profile picture
Visit me at Cappuccino Finance, I share my top picks (Value, Growth, Dividend & Growth), market outlook, and interesting ideas from super investors, based on my 12 years of experience and knowledge in stock investment and in real estate. I, Justin J. Lee, believe in fundamental analysis and disciplined market research. I have strong quant background with a Ph.D. (University of California, Santa Barbara) in model predictive control and an MBA (Jones School of Business, Rice University). My primary focus is to identify 1) small cap companies with strong fundamentals and growth potential, 2) large cap companies going through temporary set-backs, and 3) stable companies with solid dividend yields and growth potential.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of HD either through stock ownership, options, or other derivatives. 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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Comments (15)

are there any more good locations where HD can open new stores? i feel like they must already be in all the good spots and wonder how much expansion room is left.
@civ-e Mexico, Canada, UK,.....
I’m thinking a 15% dividend increase next month? Long HD
@bru the kid, i was thinking more like 10% but I like your idea better.
I love HD…. Maybe under $300..
John McCoy profile picture
@ocbearclaw You’ll likely be waiting a while for under $300. Maybe after the next split?
@John McCoy Well I already bought a ton under $300 since Covid started... But I'm wondering if the ship has sailed...
@ocbearclaw I bght HD in 1986 @ under 20c shr I wondered if the ship had sailed many times in the past 35 yrs. still own 3700 shrs. after selling 80% of original shrs. DIVVY check is 24500$ per yr.
slam stocks profile picture
HD is a fantastic company (don't have shares). I've missed the opportunity and might believe they're overpriced due to being limited to housing. Costco could be a better choice, although, more pricey, brand awareness is greater and if COVID continues to be the retailer with Walmart to shop.
@slam stocks "limited to housing". An unlimited thing to be tied to, sounds like any dip is a time to add.
Also own cost and agree.
I find it expensive now with a p/e near 28, yield near 1.6% but I do expect div to go to 1.80 from 1.65 in feb.
Would like to add but just can't at these levels. If we get a pullback in the market, it's on my list for sure.
Well managed company HD, wonderful stock for any portfolio. Had a nice run last year, wait for a dip before adding.
Cappuccino Finance profile picture
@Money 29 Long HD! Happy New Year!
MNVikingsFan profile picture
I conpletely agree with your assessment of HD. In line with your recommendation, HD has been an anchor for my portfolio during the past six years, and it's now my 2nd largest holding. I'm very optimistic that the next couple years will be very good for the stock.
Cappuccino Finance profile picture
@MNVikingsFan Thank you! Long HD! Happy New Year!
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