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The Market Glance for May 14: Betting on Home Depot

Asif Imtiaz May 14, 2018


Most large-cap companies releasing their Q1 earnings expect to dazzle investors with growth stories, but what kept stocks under pressure in the last few weeks were the worries over interest rates and trade – and those issues will continue to worry investors this week.

While there is a clear sign of a slowing economy, the U.S. labor market and the housing sector are two areas that provided investors with ample optimism in the last few weeks. These two areas are also keeping management at Home Depot, Inc. (HD ) pretty optimistic. Partly because analysts have been terribly wrong about the duration and magnitude of the housing recovery as it caused stocks of this home improvement retailer to soar by more than 500% over the last ten years.

Sure, HD is going to close a lot of its stores in the coming months, but its business will continue to boom as the company is planning to make massive investments in e-commerce to boost sales and margins. As long as the U.S. housing sector does well, HD will enjoy a tailwind – and that’s worth betting on.

To conclude, interest rates have gone north enough to keep markets trading sideways, but there are certainly some U.S. companies that can continue to perform despite the odds. Hence, look out for how individual stocks are doing instead of waiting for a rising tide to lift all boats.

Check out last week’s Market Glance here in which investors tried to access the potential implications of softer inflation data.

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