We recently published a list of Jim Cramer Latest Portfolio: 10 Stocks to Watch in September. Since The Home Depot, Inc. (NYSE:HD) ranks 2nd on the list, it deserves a deeper look.
Jim Cramer said during his latest program on CNBC that the Federal Reserve wanted to contain inflation and make sure it’s going in the “right direction” before initiating its first rate cut. With the first aggressive rate cut, Cramer believes “most businesses” can thrive.
Cramer, who is currently in Silicon Valley, said technology companies are, however, not “hostage” to the Fed and they are “automaters.” He said these companies are trying to raise margins by automating “what can be automated.”
Jim Cramer said currently cash is flowing towards companies that “would have been doomed” if the Fed didn’t start cutting rates. He said this was “day one” in many more rate cuts to come, which would create a “backdrop of positivity” for the broader market.
For this article, we chose 10 important stocks Jim Cramer talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Home Depot Inc (NYSE:HD)
Number of Hedge Fund Investors: 86
When asked about Home Depot Inc (NYSE:HD), Jim Cramer revealed he bought some more shares of the company on the latest dip.
“Home Depot is good.”
The fundamental story behind Home Depot Inc (NYSE:HD) is strong. According to data from Argus Research, about 75% of U.S. homeowners with mortgages are locked in below 4.5%. With rising inflation and high interest rates, people are keeping their homes and avoiding new purchases. That means their homes need repairs and fixes. That’s what boost Home Depot Inc (NYSE:HD) business.
Data also shows that about 70% of US homes are over 25 years old and need repairs and renovation. All of this fits well into Home Depot’s growth story.
Analysts believe Home Depot Inc (NYSE:HD) acquisition of specialty trade distribution company SRS Distribution was a master stroke from the company since it gave Home Depot a 17% market share in an industry with a total addressable market of $1 trillion. SRS is a residential specialty trade distribution company across several verticals serving professional roofers, landscapers and pool contractors. Home Depot Inc (NYSE:HD) is also investing in technology to improve business. Its pro intelligence tool and CRM platform that use data science for better insights and cross-selling opportunities are expected to boost sales and client relationships.
Polen Focus Growth Strategy stated the following regarding The Home Depot, Inc. (NYSE:HD) in its Q2 2024 investor letter:
“In the second quarter, the top relative contributors to the Portfolio’s performance were all names we do not hold: The Home Depot, Inc. (NYSE:HD), Meta Platforms, and AbbVie. With Home Depot, much of the quarter’s weakness came in April, as a higher-than-expected inflation reading caused investors to question the likelihood of imminent rate cuts in 2024. Given Home Depot’s sensitivity to interest rates, as it relates to home improvement projects, the stock sold off in the period.”
Overall, The Home Depot, Inc. (NYSE:HD) ranks 2nd on Insider Monkey’s list titled Jim Cramer Latest Portfolio: 10 Stocks to Watch in September. While we acknowledge the potential of The Home Depot, Inc. (NYSE:HD), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
