Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Home Depot Stays on Top in Retail

A sharp decline in housing starts in May did little to derail the stock market or Home Depot (NYSE: HD  ) today. In fact, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) was up 0.14% late in trading, driven by the home-improvement retailer's 1.4% rise and strength in banking stocks.

Housing starts fell 6.5% in May from a month earlier and ended up just above an annualized rate of 1 million per year. Long term, this was just the fourth time in the past year that the monthly rate exceeded 1 million homes. But the market is still below the mid-2000s when housing starts were over an annualized rate of 1.5 million.

Home Depot brushes off housing starts
There may not be as many new homes being built as expected, but that's not all bad for Home Depot. The company will benefit from homeowners refurbishing old houses, and with interest rates down this year sales should pick up during the summer.

Investors should also consider Home Depot's advantage over other retailers given the market it serves and the products it sells. The home improvement and construction market is at little risk from online retailers because it sells large items that are needed quickly and offers services Internet companies can't match. So while other retailers struggle to grow on either the top or bottom line, Home Depot is doing both.

HD Chart

HD data by YCharts.

This isn't to say that Home Depot is cheering a slowdown in home construction. It would love to have more homes to sell products for, but it isn't dependent on new building to stay in business. Home Depot's business is diverse enough to overcome ugly numbers on new homes.

The company isn't cheap at 20 time trailing earnings, but it pays a 2.4% dividend yield and has an enviable position in home improvement. This business will be around for decades to come, which is rare in today's retail environment, but I don't see anyone knocking over this home-improvement giant.

Will this stock be your next multibagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Read/Post Comments (0) | Recommend This Article (1)

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.

Be the first one to comment on this article.

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: 2997781, ~/Articles/ArticleHandler.aspx, 9/5/2015 12:35:18 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...

Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

Today's Market

updated 15 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

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

9/4/2015 4:30 PM
^DJI $16102.38 Down -272.38 -1.66%
HD $114.42 Down -2.18 -1.87%
Home Depot CAPS Rating: ****