Investors Are Asking If There's Still Room To Run In Home Depot

Shares of Home Depot Inc HD traded at around the $20 level when the financial crisis of 2007–2008 affected its core business of selling home improvement products.

When the economy began showing signs of rebounding, Home Depot naturally saw an uptick in its business. The stock has been trading north of $100 per share since late 2014 and hit an all-time high of $139.00 earlier this year. It has since pulled back to around $125.

Many investors are now unsure how to proceed with Home Depot's stock. Investors who missed out on the financial crisis lows and bought shares five years ago are still up nearly 300 percent. The stock does offer a 2.19 percent yield, and the company is active in buying back its own stock, but is this enough to support further gains?

Argus Research Conference Call

Chris Graja, a senior retail analyst at Argus Research, said during a conference call on Wednesday that Home Depot's management team believes many aspects of the business can be improved to drive the ROC (return on capital) even higher.

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Graja added that Home Depot is "very competitive" on price and has a further competitive advantage given its exclusive relationship with vendors.

Graja also suggested that Home Depot is a "boon" for contractors who can use Home Depot's app to place orders, buy materials online and conveniently pick up in store when needed.

Jim Kelleher, director of research for Argus added that Home Depot is immune from the e-commerce threat. For instance, consumers are highly unlikely to search online for sticks of lumber, pieces of wallboard or sheet rocks.

Argus holds a $154 price target on Home Depot's stock, and the name is included in the firm's "Retail Recommendations."

At time of writing, Home Depot was up 0.33 percent at $126.61 minutes after Thursday's opening bell.

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