Home Depot (HD)

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.

Would not buy at this level. The stock has had a great run. You get renovations as well as new home building benefiting them. It will come down eventually. Should do well as people start to repair after winter storm damage. No rush to sell. Best in class. There will be a lot of pent up demand.

Likes this. Recently reported earnings. Fought through the weather issue and actually had a very, very strong quarter. 35% and trending towards 40%. ROE is fantastic. Beautifully positioned for the nascent housing recovery that we are in. Thinks there is a long way to grow. Trading at about 18X earnings and growing at about 20% year-over-year.

US home industry went through tremendous restructuring. This is one of the companies that came out much stronger. Improved spending on renovation. There was a breakout yesterday in the homebuilding ETF. Most consumer related sectors over the last 6 weeks consolidated and then picked up over the last few days.

Earnings just yesterday – great results. Severe weather that impacted retailers. This one plowed through it. Perfectly positioned for the recovery we are in. Well managed. Re-engineered themselves during the downturn.

(Market Call Minute.) Quality company. Benefits from housing starts and renovations. However, given the slow start in January and store closures, they won’t be able to grow at 20% and it’s trading at 20X forward earnings so he wouldn’t buy at this time.

We have seen investors lose money in bonds in the last 6 months. He believes we are in mid-cycle in the US housing recovery. Home Depot is positioned very well.

2 important factors for this company. GDP growth and the housing recovery. Both of these metrics are going to continue to improve in 2014. Company has ongoing initiatives and increased productivity so there will be margin improvements. They want to pay out 50% of their profits in dividends, which they are doing, so she anticipates dividend increases will continue. Any excess free cash flow will be used to repurchase stock. Have a very good record of shrinking their shareholder base. Dividend yield of 1.91%.

With falling inflation and strong cash flows the consumer is in better shape. There is a slowly recovering housing market in the US. Returned 19 Billion dollars to shareholders over the last two years and more than that to come in the next two years through share buybacks and dividend increases. Shareholder friendly management.