Home Depot (HD)

(A Top Pick Oct 29/13. Up 21.94%.) She bought this based on the housing recovery and the increase in home prices. Housing starts are still below 1 million, way below the trend line. Seeing very strong sales in the last quarter they reported. They have a very good capital allocation program. Increased their dividend every year.

Had a big jump up, but revenue growth is only 4%. It may come down or it may stay there for a while. PE is rich. Their renovation component is what is driving their earnings.

This is a consumer story. The consumer is in great shape. They haven’t spent money on their homes in a long time. This company got stronger through the downturn and came out the other side in a very dominant position. Their financial metrics have been getting better. They have a great counter to the Internet trend in retail, because you have to go into a store to buy lumber and get advice. Incredibly shareholder friendly. Have been buying back an enormous amount of stock. Have increased their dividend by about 15% a year in the last 5 years. Dividend yield of 2.1%.

Stock was hit because of a credit card breach. They just had a record quarter. Had benefited from the US housing cycle. Improving their margins and coming out with new products. They return cash to shareholders and are doing everything correct. Multiples are not low, but still reasonable given their growth. As long as they do everything diligently in protecting customers’ data, they will get through this. The drop in the stock price is a buying opportunity.

Great management team. A wonderful place to sit and allow the housing recovery to mature. Very pleased with their earnings.

Analysts are all over the map. It broke through $82. Does not recommend holding it.

(A Top Pick July 17/13. Up 3.17%.) A little surprised the US housing has been somewhat sluggish and hasn’t gone up to a higher level. Moving in fits and starts. There are still probably half a million new builds shorts of just satisfying the demand. Still a Buy and is good value.

The 1 year chart is showing technical resistance at around $81. On the short term, there are higher highs and higher lows. It probably will get back to the $81 range pretty soon. From that point, you are going to need a catalyst. If it does break that $81, it would be very, very bullish for the stock. You can trade this is a short-term trader up to $81, but he would want to see it break that $81 with conviction, for a longer trade.

Very much a housing play in North America, and primarily in the US. We have not had a good housing environment since rates spiked last year. It is not “1^st time home buyers”, as much as it is investment funds buying houses and renting them out.

US consumer discretionary stocks had a great run in 2013 as investors started to appreciate that the US economy was on a more stable footing. Following that this stock has been reasonably static for about 6 months. Valuation is still quite decent at about 18X this fiscal’s year’s earnings. Given the magnitude of the run it had in the past couple of years, he wouldn’t expect to see the same level in 2014. If you have a 2-3 year time horizon, you should be able to get a decent rate of return, as it is a well-positioned company.

A great way to play any further recovery in US housing, both new construction and home renovation.

This is a play on GDP growth in the US as well as the US housing recovery. Also, benefits from resales. If GDP improves along with consumer confidence and employment, people will be more inclined to update their quarters. Have a very good capital allocation plan and are really focused on North America so on any excess cash flow, they will repurchase stock and increased their dividend. Yield of 2.41%.

Has been Buying in the last month or so. Pullback in the US market caused the share price for a lot of large caps like this, to pull back a little. Great company and trading at 18X this year’s earnings and 15X the 2^nd year out. Growing its store base at a very high rate of investment capital, and more importantly, also has exposure and leverage to a very strong housing market. Great way to play the housing market.

The US housing troughed. It did quite well along with the rest of the space, but the valuation was too rich and she got out. A great franchise and a great return on capital, but valuation keeps her on the sidelines. Weather recently may give you a pick up.

You are getting very good earnings growth. Will move up and down a little less than home builders.