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It's Time To Abandon Home Depo

Jan. 12, 2021 8:37 AM ETThe Home Depot, Inc. (HD), LOW
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  • Impossible to beat comps.
  • Rising rates meet inflation & sagging home demand.
  • Promotional incentives are on the rise.

What people needed to do at the home improvement centers they've largely done.  COVID-19 was a bonanza for HD & LOW as the stay-at-home play benefitted both immensely. The pandemic resulted in record years for both retailers which will prove troublesome for both firm's stock in 2021.  Neither HD or LOW will come close to touching 2020 sales, revenue or earnings and based upon recent market performance, participants have caught wind.  If you were long either, it's clearly a time to sell - or if you're flat, it's a fantastic opportunity to short these names.  They are great brands, but are facing a headwind which neither will be able to overcome in 2021.  After spending the better part of 2020 outfitting their homes while being stuck inside, the very last place any consumers are going to want to be are inside the tall aisles of Home Depo or Lowe's.  In my opinion, HD is a $200 stock and LOW target price is $90...and dropping.  Just watch what plays out with these retailers in 2021.

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