Home Depot Stock: 3 Reasons to Buy Now

Home Depot (NYSE: HD  ) stock is trailing the market so far in 2014, down about 3% versus the Dow's 2% rise. But that trend is set to change, Fool contributor Demitrios Kalogeropoulos argues in the video below.

Demitrios highlights three numbers from the retailer's latest earnings results that all point to solid returns ahead for the stock. First, Home Depot's profitability has doubled over the past five years, and its operating margin continues to pull away from rival Lowe's (NYSE: LOW  ) . 

HD Operating Margin (TTM) Chart

HD Operating Margin (TTM) data by YCharts.

Beyond that, the home improvement giant has made a point of returning billions of dollars to shareholders in the form of stock repurchases. Home Depot spent $1.25 billion last quarter on its shares, which helped EPS jump higher by 20% despite just a 3% overall sales boost. And finally, Demitrios highlights the company's stellar return on invested capital, which hit 20% last quarter and should climb as high as 27% next year. 

Watch the video below for Demitrios' full take.

More great dividend picks
The smartest investors know that dividend stocks like Home Depot simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 16, 2014, at 10:48 AM, mtkk2318 wrote:

    Home Depot is very close to its ceiling price. Frank and Carol need to seriously consider a stock split. It has been at this level for an extended period of time and as its price goes slightly over $80.00 a share it falls back.

    HD has reported good numbers for the past several quarters but its stock doesn't move over the $80 ish range.

  • Report this Comment On December 25, 2014, at 2:18 PM, 2ThinkNdo2 wrote:

    Looks like the split idea wasn't necessary, as the stock crosses into unknown territory $100+ and going strong. To think it was in the 20's about 4 years back.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2992442, ~/Articles/ArticleHandler.aspx, 8/28/2015 8:34:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Demitrios Kalogeropoulos

Demitrios covers consumer goods and media companies for, as well as broader moves in the economy.

Today's Market

updated Moments ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:00 PM
HD $117.52 Down -0.14 -0.12%
Home Depot CAPS Rating: ****
LOW $68.45 Down -0.61 -0.88%
Lowe's CAPS Rating: ****