“Home Depot Co-Founder Blasts Obama” — Is Home Depot a Good Stock to Own?

Earlier this week, when Steve Wynn from Wynn Resorts (WYNN, $166.38) revealed his distate for the job-killing Obama Presidency, I predicted that more corporate leaders would get brave and make similar proclamations. Here’s the next in a possible avalanche of high-profile business people telling us what they think about our President:

Home Depot Co-Founder Blasts Obama: Even ‘Brain-Dead Economists’ Get It – TheBlaze.com, July 22, 2011

excerpt:

“Investor’s Business Daily: Why don’t more businesses speak out?
Bernie Marcus: They are frightened to death — frightened that they will have the IRS or SEC on them. In my 50 years in business, I have never seen executives of major companies who were more intimidated by an administration.”

 

How does Home Depot look as a stock market investment?

I last wrote about Home Depot on May 1, 2011. (see: Protecting Stock Profits — A Step Beyond “Buy and Hold” — www.TheRightHuff.blogspot.com)

Home Depot (HD, $36.52) is a home improvement retailer, with over 2200 stores located throughout the U.S., Canada, China and Mexico. The company reported $68 billion in 2010 sales and $3.3 billion in 2010 net income.  Projected consensus earnings growth (EPS) is 14%, 16% and 16% for fiscal years 2012 through 2014. The price/earnings ratio (PE) is 15.8 and the dividend yield is 2.74%.

Based on these financials, Home Depot represents an attractive stock to keep (if you already own it) and to buy (if you’re looking for growth or growth & income stocks).

How does Home Depot look for traders? Over the last ten years, the stock has bounced around repeatedly between $18 and $50, partly due to the 2008 Financial Meltdown. This means that there are people who’ve owned it for ten years and haven’t made any profit, and people who judiciously traded the stock for profit, and people who were wise enough or lucky enough to buy low and double their money.

The stock has been recovering since the 2008 drop, but it is volatile. Good for traders; bad for low-beta investors. In 2011, the stock has traded between $33 and $38. The stock could easily break through $38 towards resistance at $43 this year, barring any major market corrections, which means a trader could buy now and make well over 10% under that scenario.

Articles: 7 Stock Picks from Cramer’s July 21 Lightning Round — Seeking Alpha, July 23, 2011

Happy Investing!

Crista Huff

July 22, 2011

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