Home Depot (HD) Gains Momentum: What's Driving the Stock?

Home improvement retailer, Home Depot Inc. HD has been in investor's goods books lately owing to its solid earnings trend, efforts to improve customer experience, promising capital strategy, and the housing market recovery. These factors have helped this Zacks Rank #3 (Hold) stock climb up the charts, despite the challenges in the retail sector.

Shares of Home Depot jumped 6% in the last three months, outperforming the Zacks categorized Building Products – Retail industry's gain of 1.8%. Further, the stock is supported by a VGM Style Score of "B" and long-term earnings growth rate of 13%, which justify its growth prospects.

Home Depot, Inc. (The) Price, Consensus and EPS Surprise

 

Home Depot, Inc. (The) Price, Consensus and EPS Surprise | Home Depot, Inc. (The) Quote

Possible Deterrents

However, intense competition and a soft economic recovery may prove deterrents, pushing back home improvement projects. Moreover, the company's significant exposure to international markets makes it vulnerable to currency headwinds.

Bottom Line

Nevertheless, we remain confident of the company's growth prospects as its strategic initiatives clearly outweigh the deterrents. Hence, we would suggest holding on to the stock for the moment.

Stocks to Consider

Meanwhile, investors may consider better-ranked stocks in the retail sector like Burlington Stores Inc. BURL, Dollar General Corp. DG and Target Corp. TGT  All these three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Burlington Stores has gained nearly 13.6% year to date. Also, the company's estimate for the current fiscal have witnessed positive estimate revisions in the last 30 days and has a long-term growth rate of 15.9%.

Dollar General has a long-term EPS growth rate of 10.6%. Further, the company's estimates have witnessed positive estimate revisions in the last 30 days.

Target has witnessed positive estimate revisions in the last 30 days. Further, the stock has a long-term growth rate of 5.4% and recorded an average beat of 16.5% in the trailing four quarters.

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