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The Dow's Often-Forgotten, Overlooked Champion: Home Depot

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The Dow's Often-Forgotten, Overlooked Champion: Home Depot

One of the best performing Dow Jones components isn't necessarily the most exciting and is often overlooked in favor of cutting edge and flash tech companies that operate in the cloud or cyber security.

Smart investors who bought shares of Home Depot Inc (NYSE: HD) when the Dow closed above 10,000 for the first time in the post-financial crisis era are sitting on a whopping 400 percent return.

CNBC's Diana Olick explained what happened over the years.

According to Olick, Home Depot benefited from the housing and financial crisis of 2007 and 2008. Specifically, millions of homes across the U.S. were either repossessed by banks or abandoned by owners during the height of the crisis.

When the recovery began, entire neighborhoods of houses were now in need of fixing up. These weren't major renovations, but smaller projects which is exactly the kind of activity Home Depot services.

Meanwhile, many other Americans were sitting on negative equity in their homes and couldn't sell property. And when people find it impossible or undesirable to move, they renovate and upgrade their current homes.

Today, demand for remodeling and renovation projects are still strong as millennials are looking to buy property. In addition, millions of homeowners have regained equity amid rising housing prices which spurs new demand for upgrades and renovations.

Image: Mike Mozart, Flickr

Posted-In: CNBC Diana OlickMedia Best of Benzinga

 

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