Home Depot (NYSE: HD) may be a large, stable company, but it hasn't stopped pursuing growth and innovating. The home improvement retailing giant recently closed its latest acquisition that management says will boost its total addressable market by another $50 billion. That purchase of SRS Distribution is just one reason why one Wall Street analyst thinks Home Depot stock is worth buying now, even as shares approach an all-time high.
According to reports, Loop Capital analyst Laura Champine just upgraded the stock from a "hold" to a "buy" and raised her firm's price target from $360 to $460 per share. That price would represent more than a 12% upside from recent levels and is roughly 10% above the stock's record high.
Loop Capital's director of research also thinks more macroeconomic factors will lead to a reversal in recent sluggish demand in the home improvement sector. In its most recent quarterly report (for the period ended July 28), Home Depot said comparable sales decreased 3.3% year over year. Management projects that full-year comparable sales will be down a similar amount compared to 2023. However, the analyst sees close to double-digit long-term growth for Home Depot.
Champine noted several positive factors including a cycle of falling interest rates, the recent resolution to the port workers strike, and an increase in demand from repair and reconstruction efforts from this season's major storm damage.
The SRS acquisition could be timely for increasing demand in residential markets, too. The trade distribution company serves professional roofers, landscapers, and pool contractors. And even if the resumption of growth doesn't occur right away, investors collect a dividend from Home Depot that has a history of steadily increasing. Home Depot's dividend, which yields about 2.25%, has grown nearly 380% in the past decade.
The stock is approaching record levels even as sales have slowed. It's likely shares will reach Champine's projected price if that trend reverses in the near future.
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
See 3 “Double Down” stocks »
*Stock Advisor returns as of October 7, 2024
Howard Smith has positions in Home Depot. The Motley Fool has positions in and recommends Home Depot. The Motley Fool has a disclosure policy.