Home Depot (HD-N)

Expanding ability to get a larger part of the addressable market via acquisitions and maintenance/repair opportunities. Going after the pro segment. Getting better at digital commerce. Missed street expectations, but 12/16 categories showed strength.

Cheaper than it's been, probably still a good long-term buy. Dominant market position, and ultimately housing will come back. But housing's in a slowdown, US consumer will go through some difficulties from tariff risk and higher mortgage rates. He has nothing in retail/consumer right now.

He bought more around $359 to replace shares he called away. Rates are still high, so there is still a long-term recovery happening.

Covid saw overspending by consumers, then underspending, now normalizing. Rising interest rates have affected lower-income US households, and that's showing up in HD traffic numbers. In US, over 50% of homes are over 40 years old; long-term secular trend to repair and modernize. 

Likes it, but is hard to own due to a lousy housing market and weak gardening season. Hold your nose to buy it.

When interest rates stay stable this will be fine. Also gardening season is coming along. However, people look at the weak housing starts and don't buy HD. Don't be constrained by that.

They report Tuesday. HD isn't levered to interest rates, but rather repair and renovation trends, which is a tailwind. Is -2% for the year, well off its highs, but he likes this long term. Also, HD has the scale to absorb the tariffs on their foreign-made goods.

Owns it because interest rates are coming down by year's end and there's a 5-year super cycle.

Last September, he sold and took profits. Shares are trading ~24x forward PE, for 5% EPS growth. Valuation's expensive. EPS growth rate expectations have come down. Cautious spending by consumers, stock's slipped below 200-day MA. Long-term inflation is dampening the DIYers, sluggish home sales. A name to own early economic cycle, and we're about mid-way through now.

He wouldn't buy at this point, consumer is still very weak. YOY organic growth is negative. Still trades at a fairly hefty premium compared to the market and to its own historical levels. He'd wait till consumer and housing are stronger.

Interest rates cuts are stalling, so shares are -7.74% the past month; housing turnover and the weather have been bad. Tool sales are down. It reports tomorrow, but he will buy after that report. He has faith, because when the street was shorting this in 2008's housing crisis, HD gained market share and bought back a ton of shares.

It reports Tuesday. He expects a soft quarter from weak housing, but HD will benefit from the rebuilding from the south-eastern US and the L.A. fires.