Home Depot Inc (HD) is a good example of a stock benefiting from new housing starts and continuing home improvement, a sector of the economy expected to benefit from an improving consumer-discretionary segment, according to Portfolio Manager Jason Hans of BMO Asset Management.
This overweight is spread across a few different areas of discretionary. We’re seeing really attractive opportunities in what I would call very durable types of consumer discretionary stocks, as in things tied to the housing market and the automotive market.
HD specifically is expected to reap rewards in the current environment.
The housing market has continued to recover at a nice pace since the bottom of the financial crisis. That has really driven a lot of remodeling and renovation decisions. Home Depot got a nice boost from both new housing construction and ongoing renovation and remodels done by homeowners.
Hans says Home Depot has a strong fundamental story with profitable growth that is higher than the market as a whole, and that valuation is still reasonable.
We’ve seen the market as a whole rewarding stable, high-quality and good-growth stocks. We think Home Depot fits right into that story without having to pay too much for it. We’re cognizant of not wanting to overpay for those characteristics, and Home Depot, we think, is still a very attractive position to have in that market.
Also, we like that Home Depot’s exposure is almost 100% U.S. So with all of the volatility outside of the U.S., including exchange rates and a strong dollar, with Home Depot, you don’t have to worry about any of that noise coming through and impacting earnings. It’s a very clean story.
Exxon Mobil Corporation (XOM) Trades at Reasonable Valuation; Stable Energy Company
July 15, 2013
High Dividends and Growth at a Reasonable Price
September 13, 2022
The Home Depot, Inc.’s (HD) and Lowe’s Companies, Inc.’s (LOW) Recent Growth At Risk
December 11, 2013
Home Depot Inc (NYSE:HD) Has Long Runway of Growth
February 14, 2017
The Home Depot, Inc. (HD) Positioned to Raise Dividend Up to 14% After 20%-Plus Increase in 2014
April 29, 2014
