Tuesday, July 27, 2010

Good Housing Data- Buy Home Depot

After the home buyer tax credit expired, the housing data plummeted, dropping even more than analysts expected during the months that followed.  Recently though, the housing data has turned around.  Yesterday, new home sales rose sharper than expected, and this morning, home prices rose more than expected in May.  It may still be to early to buy the homebuilders since they are competing with tens of thousands of foreclosures- which are far cheaper in price than a new home.  A much safer way to play this good housing data is with Home Depot (HD).  HD management has done a great job turning this company around.  Its now a much leaner company, and the costumer service is far better than is was even five years ago.  Last time HD reported earnings, the company beat estimates and rose their FY 2010 guidance.  How about Lowe's (LOW), HD's main competitor.  Last time LOW reported earning, the company's earning were below estimates, and the guidance was on the lower end of estimates.  HD has a track record of paying a good dividend, which they raised at the beginning of this year.  The company announced a share buyback program last time they reported- I am sure they are taking advantage of these depreciated prices.  The stock is well off its 52 week high of 37.03, currently at 29.30.  HD has not announced when they will release Q2 earnings, but it should be around the middle of August.  This is a great company- well run- and seems to be making all the right moves.

HD 29.03  52wk 24.47-37.03

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