Home Depot Inc (NYSE: HD ) - This retail warehouse chain that sells a variety of home improvement items operates more than 2,275 stores in the U.S., Canada and Mexico. The company is on a Jan. 31 fiscal year, and last FY reported earnings per share of $5.46. For FY 2017, Standard & Poor's raised its earnings estimate by 2 cents to $6.33 and their FY 2018 estimate to $7.18.
They also raised HD's price target by $3 to $144.
The increases are due to the cyclical nature of Home Depot's business and S&P's revised increases for GDP. HD stock's holders should also benefit from an increase in its share repurchase program by $2 billion to $7 billion and its dividend of $2.76, for a 2% dividend yield. The purchase of Interline Brands in August should help the parent company increase its revenues by 6.3% in FY 2017. A moderate housing recovery is also built into projections.
Technically HD stock is in a broad bull market with support at about $123 and resistance at $150. However the break from a one-month double top on Monday at $137 supported by a Golden Cross (50-day crosses 200-day moving average), and a new MACD buy signal, bring renewed energy to the stock's momentum.
The renewed momentum is because the small double top is part of a larger quadruple top which began in April 2016, thus the breakout carries more significance than a simple break from a small double top.
Thus, traders and investors should buy HD stock at $138 with a target of $156 for a proposed return of about 12%.
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