Home Depot (HD)

Retail advantage: unmatched support for small/medium contractors. Also, they have such scale, they can collect massive data and harness that data using AI to better predict their business.

Right after the companies recently reported, sellers pulled the trigger before they heard the conference calls, which indicated the companies are doing well. These are good companies and those sellers deserved to lose money. HD announced that their inventory glut of 2023 is now over, that inventory fell 16% last quarter vs. the prior year. Therefore, quarters will improve going forward, especially in the key spring gardening seasoning when sales usually pick up. Also, HD boosted their dividend. As for Lowe's, the CEO announced that high-margin building materials was their best-performing segment, and they will launch a loyalty rewards program in the spring  Further, bad weather impacted sales in January for both companies.

Reaction was mixed to their mixed quarter: Q4 comparable sales of -3.5% though better than the expected -3.6%; net sales were -2.9%, but less than expected; earnings shrunk 15% year over year, though beat the street. A "meh" quarter and meh forecast: disappointing full-year sales, though higher gross margins. But it raised its dividend 7.7%, a sign of confidence. Management said that inventory levels are under control and are improving their pro contractor business.  Their pro and DIY customers performance were in line which is good. HD continues to navigate inflationary and deflationary pressures. Like their conservative forecast, and spring cleaning will be a catalyst. Shares remain close to highs, far from lows.

In addition to its stores, HD is getting into repairs, selling to hospital, prisons and government institutions which are less cyclical. Are taking share from Lowe's, plumbing stores and HVAC supply stores. Earnings and dividends have compounded 16% annually over the last decade. Good valuation and still off previous peaks.

Was upgraded today. The hope is for normalization this year after the Covid boom and the post-Covid bust for HD. It will start performing again. Likes it. Falling interest rates will certainly help. True, it is a mature company, but new housing development is a long-term trend given the housing shortage.

Jumped 3.06% today after an analyst upgrade, citing falling interest rates and that falling home sales are in the rearview mirror, so the inflection is in sight.

Has been hated, but just reported top and bottom line beats and didn't touch their full-year forecast. Sure, expectation were knocked down first.

The affordability of housing is a concern as well as the possibility of a reduction in the renovation market due to higher rates. This could have a dampening effect over the next couple of quarters but you could buy it for the long term. It is very well run and has been a great company over the years.

If inflation is really declining, then people will buy houses again and shop at HD. It's time to consider the home stocks again. Today's rally (based on tame CPI today) shows pent-up demand for these beaten-up stocks. 

People are clueless about this stock--are high mortgage rates are causing homeowners to remodel instead of move? Is shoplifting a worry to company numbers? Housing remains the worst part of inflation.

Long-term, great company. With home supply at minimal levels across NA, and people stuck in lower mortgages, home improvements trump moving house. Inflation Reduction Act begets infrastructure spending, which trickles down to HD. Reasonable 18x. Consistent, well managed, share count not increasing. 

He'd argue tailwinds, not headwinds, despite higher interest rates and slowing economy. Set to be a great defensive retailer if we have a recession. Good proxy if you want retail exposure, because they'll be hurt, but not as much as others. Yield is 2.9%, but there's withholding tax unless it's in an RRSP.

The homebuilder sector has been hurt by higher interest rates as the consumer shows some cracks in spending. Employment is holding up for now, so maybe the consumer will hold up after all. Watch the consumer. Prefers Lowes for its better multiple.

He owns retail, but not names like LULU or Nike, but rather defensive ones like this. He sees more weakness in pooer consumers (i.e. Dollar General which plunged recently). HD benefits from the general consumer trade-down of staying in your home longer and fixing it up. The days of consumers being flush with cash are over. Done. Inflation seems to be weakening the low end of the job market.

He trimmed, because it's not going anywhere near term. He is building cash for the current market pullback. He will add to Nvidia, Microsoft and Apple on more weakness.

They report next week. HD suffered when people stopped spending on homes post-Covid, but that's now past. People are spending on experiences, but also on their homes (and goods) again. Since mid-May, HD has risen 17%, outpacing the market. She expects a good report and for positive trends to continue. It helps that commodity prices have come down.