Karen Firestone, CEO, Aureus Asset ManagementHome DepotHDBUYAug 11, 2023

They report Tuesday. It's been a huge bust, with shares are going down and down because of the spike in interest rates. He doesn't expect anything food from the quarter this time, but if the quarter isn't terrible there's a chance of a rally.

Is getting punished because doubts there will be an interest rate cut because inflation is climbing due to the US-Iran war. Is -9.5% this year.

Solidly in consumer discretionary, which explains its fall. Very interest-rate sensitive -- rates didn't go down as much as expected, plus Iran war caused jump in inflation. People defer renovations because they're often funded with loans. Its earnings recovery is deferred, not aborted.

They hit a two-year low yesterday. It's a terrible time for housing. This needs a couple of consistent interest rate cuts to go anywhere.

It yields 3%. Down 2.41% today and hit a 52-week low. Very disappointing. He needs to see lower mortgage rates and the ICE raids are a problem.  He hasn't given up on this, but it's hard to own.

He got stopped out yesterday, losing 10% of his holding. He still likes it. Mortgage rates need to get below 10%.

It's a show-me sector, related to the consumer and gas prices. Before the oil shock, HD was still a show-me story with little growth and trading at a high PE.

Dominant home improvement retailer in US. Its edge is being a one-stop shop for complex, multi-trade projects. Taking share from both LOW and specialty suppliers. Expanded into roofing, building products, and repair/maintenance. Stepped up e-commerce.

13% compound pace of dividend increases over last decade. Lagged effect of interest rate increases in US likely to shore up housing this year and bolster earnings. Yield is 2.50%.

Is a major holding. There will be more interest rate cuts. HD is a great way to play the turnaround in housing to come.

The low-end consumer is challenged due to high prices and inflation since Covid. Also, it's a cyclical stock. Wait for better certainty.

With lower interest rates, buy the homebuilders. They reported a disappointing quarter because interest rates have been too high, but shares have fallen too far, so you can buy it here. Yesterday, they offered encouraging words at investor day if the Fed lowers rates (which it did today).

Among the disappointing retail companies. Is very tied to interest rates. The Fed meeting is next week, so things could turn out quickly.

It reports Tuesday. It was downgraded today. HD suffers from lack of housing turnover and ICE targets day labourers who hang out at HD parking lots. If you think the Fed will cut interest rates next month (he does), them buy this. 

Was down 1% today. It needs deeper interest rate cuts than 25 points as announced today to get this stock rallying. The stock will still go higher, albeit slowly.

Trump tariffs will cause a decline in consumer spending. This is why Trump is pressing the Fed to cut interest rates to boost consumer spending. Lower rates will help anything connected to a home equity loan--therefore HD. This is why HD is rallying despite tariff pressure