But things can’t possibly get much worse. This is a company with over 2100 retail stores and $79 billion in revenues last year. And while the housing market shows no immediate signs of recovery, the stock is cheap enough to warrant a buy here.
Consider that Home Depot is still the largest home improvement retailer in the country. Moreover, the stock has taken a beating not dissimilar to that of a homebuilder. Indeed the stock sits at four-year lows at $32, and sports a P/E of around 11, which is historically a level at which the stock has found support.
Meanwhile, the company is on a path to improve in-store expertise and give existing stores a facelift to better compete with Lowe’s. More importantly, the company is in the process of a huge share buy-back, and pays a 2.7% dividend.
Home Depot is turning a corner and I strongly believe that the stock deserves to be bought here. I can’t imagine it remaining at these current levels for too long.
-- Faisal Laljee
Full Disclosure: I do not own Home Depot, but my position can change anytime without notice.
2 comments:
Dear Mr. Laljee
As a recent homeowner I have experienced LOW to be much better than HD. All my friends prefer buying from LOW. The staff of LOW is friendlier and more knowledgeable. If you talk about fundamentals, there too LOW has an edge over HD. Better PEG, better debt/equity ratio and better ROE and ROA. LOW being a smaller company has a better chance of growth too. Considering all these factors I think LOW is a much better buy than HD. What do you think?
http://www.valueinvestmentblog.com/
Mr. Laljee,
When you said that things couldn't possibly get any worse with HD, I think there is still more trouble down the road. I work in a store and you are assuming that Mr. Blake is going to do what he has said in the press. I can tell you there have been no increase in employees(in fact they are still cutting), no new systems and equipment or improvements in logistics to stop the rampant out of stocks, no reduction in time consuming stupid six-sigma paperwork and micromanaging from Atlanta by people with ZERO retail experience.
They are only concerned with buying back stock to artificially increase the earnings pershare. Mr. Blake may be a kinder, genteler ceo, but he has no clue how to satisfy customers, and the company is still full of Bob's GE yes-men.
Employees are losing patience, and the best ones are giving up on the company caring about us or the customers. They are leaving all the while are hours are being slashed even further which reduces sales, and it's a visicious circle.
Lowes is taking market share and nothing is being done to stop it. We try our best, and work our butts off, but we have to fight the company tooth and nail to do this. To me this is not a sign of a prosperous company. Thanks, nancy
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