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Trade of the Day: Home Depot Inc (HD) Stock Building Up to More Gains

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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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The post Trade of the Day: Home Depot Inc (HD) Stock Building Up to More Gains appeared first on InvestorPlace .

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


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

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