Investing works best when investors adopt a long-term mindset. Thinking in terms of decades instead of days or months allows one to focus on the factors that matter the most. And it allows for the power of compound growth to work its magic.
Looking back, there have been some massive winners that favored patient investors. For example, one dominant industry-leading enterprise has generated a total return of 6,540% for shareholders over the past 30 years (as of July 15). That monster gain means that if someone invested just $1,000 in July 1995, held on, and reinvested their dividends steadily, their holding would be worth about $66,000 today.
But what retail stock produced this 66-fold return, and is it still a worthwhile portfolio addition today?
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A history of success
Chances are that you live close to a Home Depot (HD 1.27%) location. The company now has stores within 10 miles of 90% of the U.S. population. But it wasn't always this way.
Back in January 1995, there were only 340 Home Depot locations. The company was growing like wildfire in those days, as it sold building materials, appliances, home decor, and various tools to both do-it-yourselfers and professional customers. The early leadership team knew that they could expand, opening new stores in new markets.
As of May 4, 2025, there were 2,350 Home Depot locations, including 182 in Canada and 140 in Mexico. The business is a true retailing juggernaut these days, with $39.9 billion in sales in its fiscal Q1 alone. Unsurprisingly, this top-line figure is astronomically higher than what it booked 30 years prior. And it makes Home Depot the leader in the home improvement retail space, with Lowe's running a distant second.
Home Depot also generates tremendous profits. It reported $5.1 billion in operating income in its most recent fiscal quarter. Management is keen to return money to its shareholders. Dividend payouts totaled $8.9 billion in its fiscal 2024, and share repurchases were also a part of the mix.
Is Home Depot stock a buy now?
Home Depot's rise in the past three decades has been impressive. It's a dominant retailer with a strong brand presence, unmatched inventory assortment, and well-developed omnichannel capabilities. This should help it maintain its industry position.
But is the stock a buy now? One reason investors might not think so is that the company hasn't been performing as well in recent years. Home Depot has shown just how sensitive it is to macroeconomic factors such as higher interest rates and inflationary pressures that discourage consumers from spending big money on renovation projects and upgrades.
Home Depot is positioned well to thrive when macro conditions improve, though. One data point to keep in mind is that in 2022, the median age of a home in the U.S. was 40 years, up from 31 years in 2005. Older houses require more upkeep, which should support demand for what Home Depot sells.
This is a high-quality company that has hit a rough patch. Yet the stock still trades at a price-to-earnings ratio of 24.3. That's close to the ratio that S&P 500 trades at, but it's still an expensive valuation considering that Home Depot's earnings per share are only projected to grow at a compound annual rate of 5.9% between fiscal 2024 and fiscal 2027, according to analysts' consensus estimates.
The positive view is that the home improvement industry will always be around, and that durability might be an attractive trait for investors looking to buy shares and hold them for the long haul. In my opinion, however, the best course of action would be to keep Home Depot on your watch list and wait for a lower valuation.
