Jim Cramer’s Top Stock Picks: 10 Stocks with High Potential

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

Number of Hedge Fund Investors: 86

Jim Cramer highlighted that with mortgage rates decreasing, companies connected to the housing market, such as The Home Depot Inc. (NYSE:HD), are likely to see increased business.

“Mortgage rates are trending lower, and that should lead to more business for companies levered to the housing market, including Club name Home Depot Inc.”

The Home Depot, Inc. (NYSE:HD) stands out as a strong investment opportunity due to its solid financial performance and strategic approach, even in the face of economic challenges like high interest rates and uncertainty. In Q2 2024, The Home Depot, Inc. (NYSE:HD) exceeded revenue expectations with $42.57 billion and reported an earnings per share (EPS) of $4.67, slightly above what analysts had predicted.

The Pro segment, which serves professional contractors, is thriving compared to the DIY segment, thanks to factors like high employment, wage growth, and rising home prices. This success positions The Home Depot, Inc. (NYSE:HD) for growth, especially since home improvement spending is expected to rise through 2024. The Home Depot, Inc. (NYSE:HD) is also expanding with new stores, smart home products, and its “Complex Pro” initiative, which aims to increase its market share among professionals.

Although The Home Depot, Inc. (NYSE:HD)’s revised fiscal 2024 guidance suggests a slight decline in comparable sales, the company is still optimistic, with a total sales growth forecast of up to 3.5%, aided by an extra week in the fiscal year. Overall, The Home Depot, Inc. (NYSE:HD)’s strong earnings, strategic plans, and expansion efforts indicate a positive long-term growth outlook, making it a promising investment.

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.”