Home Depot (HD)

(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.

Has not hit highs in the last 6 months. A sideways grind for 6 months. Thinks we may go marginally higher but he would tend to lighten up.

Play on recovery in US housing market and the economy. Very shareholder friendly, reducing shareholder count by 10%.

(Top Pick Nov 7/12, Up 24.42%) US housing recovery is still on track. Houses in the US are aging more so than in other countries. Cheaper than Lowes. 2% dividend growing by 10-15% per year.

Sold a Feb $65 Put and collected $2 in premium. Wants to reinvest the $2 in buying an upside Call with the same Feb expiry. What price would you recommend? With the $65 Put, the caller has taken on an obligation to buy the stock at $65. The stock is above that price, so he won’t have to buy, because no one is going to make him buy it at a price higher than what they can sell it at in the market. To leverage the $2, he would probably buy an $80 Feb Call.

Executed very well in terms of spinning off businesses and retooling a lot of the stores. They are not necessarily leveraged to new home sales but more to existing home sales as people redecorate, etc. At this level he doesn’t think valuation multiples are going much higher from here. If they report a quarter or same-store sales and stumble, this stock is going to get hammered.

Best of breed. He would hold it if he still owned. Dividend. Good long term blue chip name and he prefers it over Lowes. Rona has had a very tough time.

Likes this. Trading at 18X forward earnings and long-term growth is probably 15%. PEG ratio is at 1.1%, which is very, very fair. Dividend of 2.1% and it will grow. Doesn’t think they have any plans to continue to build stores, so they are not going to over saturate, which is a good thing.

This is a huge beneficiary of the housing recovery. During the downtime, they got their business in order and became very, very efficient. Their ROE is approaching 40%. Making a lot of money.

Is there an ETF that does white goods or furnishings? There are furniture retailers and home improvement places so one stock you could look at would be Home Depot which is well run and has a good footprint in the US and Canada. 2% dividend which is growing.

Continues to be a beneficiary of the homebuilding recovery. Well managed company and he thinks they will do well going forward.

Recovery in housing. Were out of favour for a long period of time. Restructured to come out the other side strong. Rationalized locations, got very focused on financial metrics and bought back shares. Raised dividend by 34%, strong cash flow. Beneficiary of pent up demand in home improvement.