Is The Home Depot, Inc. (HD) Destined for Greatness?

It seems increasingly obvious that the U.S. housing market is gaining momentum again. In certain areas of the United States, the amount of money spent on a mortgage remains cheaper than the price of rent, even four years after the housing crash supposedly bottomed out. Even if interest rates rise, they would still be dawdling near historic lows, which certainly has its appeal to a growing number of potential homeowners — and a tighter housing supply of late means that builders must build. When that happens, Home Depot tends to benefit, just as they would if a larger number of homeowners crawl out from beneath underwater mortgages and perform the necessary repairs to put their pads on the market.

Over the past few weeks, some investors have sold off their stocks and bonds as the Fed has begun to signal a possible slowing of its bond-buying program. Treasury yields spiked dramatically, which have caused mortgage interest rates to rise as well. In the aftermath, mortgage activity has declined — however, if interest rates stabilize or even drop a little bit, it’s highly possible we’ll see a mortgage rebound as more buyers rush in to “lock in” what’s undeniably still a very low rate by historic standards. Conversely, a sustained drop in mortgage activity could also wind up being a net positive for Home Depot should a number of existing homeowners simply decide to repair rather than move out.

Putting the pieces together
Today, The Home Depot, Inc. (NYSE:HD) has many of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.

The article Is Home Depot Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Home Depot.

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