Home Depot is a renowned home-improvement retailer based in the US. The company sells a wide range of hardware, maintenance, décor, and construction-material products. Other offerings include installation services for Do-It-For-Me (DIFM) customers, as well as equipment rentals for Do-It-Yourself (DIY) and professional customers.
Considered a dominant force within the North American retail market, Home Depot operates more than 2 300 stores in the US, Puerto Rico, Guam, and the Virgin Islands. A further 315 stores are in Canada and Mexico. This store footprint is complemented by a rapidly growing e-commerce platform.
Technically, the stock is trading in an accumulation phase of the Wyckoff cycle, which typically ensues just after a prolonged downtrend (see the black trendlines on the main chart as well as the insert).
During this phase, large institutional investors begin accumulating shares at discounted prices. This leads to an increase in buying pressure that causes the stock price to rise. The Wyckoff cycle eventually transitions towards a markup phase, at which point upside momentum is strong.
The stock recently crossed above its 200-day simple moving average (SMA) of ~$296, signalling a bullish shift in its price trend.
Our bullish bias is supported by strong upside momentum according to the Moving Average Convergence Divergence (MACD) indicator, as well as steep upwards movement of the On-balance Volume (OBV) indicator.
Share Information
| Share code | HD US |
|---|---|
| Industry | Consumer Discretionary |
| Market Capital (USD) | 302.7 billion |
| One year total return | 3.15% |
| Return year-to-date | -3.28% |
| Current price(USD) | 301.09 |
| 52 weeek high(USD) | 347.25 |
| 52 week low(USD) | 264.51 |
| Financial year end | January |
| Closing paragraph | The share price has dipped in recent months but is expected to rebound going forward as several technical indicators suggest strong upside potential. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 16.69 | 14.99 | 15.95 | 16.91 |
| Growth (%) | -10.19 | 6.42 | 5.99 | |
| Dividend Per Share (USD) | 7.60 | 8.36 | 9.04 | 9.53 |
| Growth (%) | 10.04 | 8.10 | 5.45 | |
| Forward PE (times) | 20.09 | 18.87 | 17.81 | |
| Forward Dividend Yield (%) | 2.78 | 3.00 | 3.17 | |
| Closing paragraph | Inflationary pressure is expected to weigh heavily on growth in FY24. Once this subsides however, the company should make a decent recovery. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
HLMN - Buy (Continue to hold) |
VXF - Buy (Continue to hold) |
NDAQ - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 8.01 | 139.26 | 55.03 |
| Current | 8.85 | 145.93 | 57.67 |
| Movement | 10.5% | 4.8% | 4.8% |
| Summary text |
The price continues to display repetitive cycles in sequences. The stock remains above its 200-day simple moving average. Upside momentum supports the trade.
Our profit target is $10 with a trailing stop-loss at $8.10. Exit the position on 6 October 2023. |
An incomplete symmetrical triangle pattern remains of interest. The ETF is trading above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is $153 with a trailing stop-loss at $140. Exit the position on 2 November 2023. |
The company's stock price remains above key support and continues to display a pattern of higher lows. Upside momentum supports the bullish trend.
Our profit target is $60 with a trailing stop-loss at $55.20. Exit the position around 8 September 2023. |
| Share Name and position |
COST - Buy (Continue to hold) |
AIG - Buy (Continue to hold) |
HACK - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 501.27 | 54.72 | 47.58 |
| Current | 520.09 | 56.63 | 48.93 |
| Movement | 3.8% | 3.5% | 2.8% |
| Summary text |
We continue to observe a confluence of technical indicators that aligns with a bullish trend. The share is trading above its 200-day simple moving average. Upside price momentum supports a bullish bias.
Our profit target is $560, with a trailing stop-loss of $490. Exit the position around 7 July 2023. |
The stock continues to exhibit a broadening top pattern. The price is currently testing its 200-day simple moving average, with upside momentum supporting the bullish trend.
Our profit target is $62 with a trailing stop-loss of $53.20. Exit the position on 2 August 2023. |
The price remains above critical support and trade continues above the 200-day simple moving average. Upside momentum supports the bullish bias.
Our profit target is $55 with a trailing stop-loss of $47. Exit the position around 4 August 2023. |
