Home Depot To Gain From Hurricane Sandy Rebuilding

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For many homeowners and building contractors, the road to recovery from Superstorm Sandy will run through the checkout line atHome Depot ( HD ).

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 January.

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 Holdings ( SHLD ). The analysts also have praised continued improvements in the company's operations, from its supply chain to its store-service levels.

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 e-commerce opportunities.

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.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: HD , SHLD

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