For many homeowners and building contractors, the road to
recovery from Superstorm Sandy will run through the checkout line
atHome Depot (
That view helped lift the No. 1 home-improvement retailer's
shares on Wednesday.
Analysts already had been expecting solid profit growth for
Home Depot before Sandy struck.
They were seeing a 17% gain in fiscal third-quarter EPS,
followed by a 22% increase in Q4. Home Depot's Q3 runs from
August through October, while Q4 runs from November through
Revenue increases were anticipated to be more modest -- and
well below the 25%-or-more level shown by elite stocks. Wall
Street sees 3% for Q3, and 9% for Q4. The Atlanta-based company
plans to release its Q3 results on Nov. 13.
The stock's strengths include steadily rising sponsorship by
U.S. mutual and hedge funds. The number of funds with a stake has
ramped up for five quarters in a row, according to IBD data.
Fidelity Contrafund and Fidelity Magellan Fund are among the
leading growth funds that own shares.
Analysts at Credit Suisse have said they like Home Depot's
opportunity to take market share from ailing retailerSears
). The analysts also have praised continued improvements in the
company's operations, from its supply chain to its store-service
Home Depot generated headlines in September with its decision
to cut back in China, closing its seven big-box stores in that
country. It will stay in business there via specialty stores and
Credit Suisse described the move as having an "immaterial"
financial impact, as well as a "prudent decision from a company
and management team with a strong track record of operating
results and capital allocation."
In terms of chart action, the stock has been consolidating for
about four weeks, mostly holding just above its 10-week moving
average. If Home Depot ends up forming a new base, the pattern
would be a later-stage structure.
The stock pays a dividend with an annualized yield of 1.9%. It
has a three-year EPS Stability Factor of 2, near the
best-possible level of 0.