Jim Cramer on Netflix and Other Stocks

7. The Home Depot, Inc. (NYSE:HD)

Number of Hedge Fund Holders: 86

The Home Depot, Inc. (NYSE:HD) is a leading home improvement retailer. The company provides a diverse selection of products, including building materials, home improvement items, lawn and garden supplies, décor, and facilities maintenance products. Cramer likes the company, especially with the mortgage rate rising. He commented:

“Well, I think that Home Depot.. is really the sweet spot because you also have the remodel renovate that happens when you have these terrible hurricanes… A more pointed way to be involved right here with that mortgage rate back up is indeed with Home Depot.”

In response to changing consumer behaviors, particularly as rising costs have led many to postpone home improvement projects, The Home Depot (NYSE:HD) has pivoted its focus towards serving contractors and professionals in the field. A key move in this direction was the acquisition of SRS Distribution for $18 billion in June.

The acquisition is expected to improve the company’s offerings in roofing, landscaping, and pool equipment. Management estimates that this deal will significantly broaden the company’s market potential, expanding it to an estimated total of $1 trillion.

On October 9, Loop Capital upgraded The Home Depot (NYSE:HD) to Buy from Hold with a price target of $460, up from $360. The upgrade is owed to observations from store checks showing that demand in the home improvement sector may have stabilized after a period of decline, as per the firm.

Although the upcoming quarter may face challenges due to disruptions from hurricanes, the analyst suggests that investors are likely to remain optimistic about future demand growth. The swift resolution of the port strike has also contributed to this favorable outlook and the analyst is “pleased” with it.

Diamond Hill Capital stated the following regarding The Home Depot, Inc. (NYSE:HD) in its Q2 2024 investor letter:

“Other bottom Q2 contributors included Caterpillar and The Home Depot, Inc. (NYSE:HD). Similarly, home improvement retailer Home Depot faces growing concerns about the consumer spending environment — particularly for home improvement expenditures. However, we believe the company’s long-term prospects and multi-year fundamental outlook are unchanged.”