Home Depot (HD)

He is very bullish on the reno cycle. If tariffs get slapped on imports from China it will have a negative impact on this stock.

Reported this morning with strong numbers and a strong quarter, but the stock was off a couple of dollars. Higher interest rates may mean higher mortgage rates with increased borrowing costs. However, the Company made some good points. They looked at the affordability Index, which is currently above 150. An average median household can buy a medium-priced home at an 80% mortgage, and as the rate goes up, it is more positive. Employment growth is strong, consumer confidence is strong and the economy is growing. All of these things work in their favour. (Analysts’ price target is $148.80.)

Home Depot (HD-N) or Lowe’s (LOW-N)? Home Depot is about 3 to 4 times the size of Lowe’s, and their store count dwarfs Lowes. This is down about 6%-7% this year where Lowe’s is having a better time of it. However, going back 5 years, Home Depot has been a better, smoother experience. This is a tough call, but knows that Home Depot’s footprint is a bit higher.

(Home Depot (HD-N) or Starbucks (SBUX-Q) for a long-term US dividend growth stock?) The market has taken 10%-15% off both names this year. He likes and owns both. If you can do it in your portfolio, you might want to buy half of each. The US consumer is still very healthy. Household formations have continued to grow at about 1 million a year, and he likes this stock based on the fact that there continues to be home sales increases in the US. Both are dividend growers. (Also see Top Picks.)

Well-run and has a good balance sheet. You are playing a housing market recovery. Thinks earnings on this is going to increase by about 4%-5%, and you are paying a pretty hefty multiple for that. It has an okay dividend.

Home Depot (HD-N) or Lowe’s (LOW-N)? On a purely statistical basis and EPS growth, Lowes is the better company. However, standing back and looking at the corporate culture and corporate philosophy, he prefers this one.

Dividend growth strategy? She agrees with buying this if you want dividend growth. They continue to build and grow their top and bottom line. The 100-pound gorilla in their arena. You have to be very careful about the methodology of dividend growth. It is not necessarily about buying utilities, which seem very appealing. But they’ve been bid up by everybody looking for dividend yield. You are much better off buying oddball things like Texas Roadhouse (TXRH-Q). Be careful of telecommunication companies, because they will be squeezed. A good dividend yielding stock that is off the radar is Domtar (UFS-N). (See Top Picks.)

A bet on the millennials and the demographics. These are great operators. As the millennials mature in, they are going to have to buy homes, and there is going to be a lot of demand come into this company. Dividend yield of 2.18%.

(A Top Pick Sept 9/15. Up 12.56%.) Her target price is about $20 higher than the current price. The company is posting really strong results. This is a play on the whole improvement in US employment, housing starts, household formation and improving sentiment.

Likes this stock, because it is playing in an important theme, the US housing recovery. It is becoming a bit expensive, but if they keep beating expectations because of the favourable trend in the housing market, it is still a decent stock to own at this point.

A very well-run company, however valuation keeps him back a little. The tailwinds to the US housing market spending will continue, but he doesn’t believe the risk/return is good enough to warrant being in the stock today.

A play on the development of US housing. There is still a run rate that is less than adequate to satisfy the growth of population. The US is basically building 1-1.2 million new household formations each year, and they need closer to 1.5 million to keep up with the population growth. That will lead the housing market to do well, which leads this company to do well. This is also a play on home renovations. If some of the housing market doesn’t do so well, people will stay in their homes and fix them up. They have done a great job in enticing the professional builder into their stores. Their margins are very high, and have doubled over the last 6 years, which is really astounding. Dividend yield of 2.08%.

HD-N vs. V-N. Don’t focus on the current yield. He thinks V-N will deliver 20% dividend growth going forward. HD-N is also a high dividend grower. You need to decide which business you want. He would go with V-N because it is the largest electronic payment network in the world. They just completed the European acquisition and it should be very accretive.

The US housing market has really recovered, and in fact US home sales were the highest since before 2007. This is one of her favourites and strongest in the US housing sector. They have a lot of online sales.

(Market Call Minute.)