Home Depot Confounds It Critics

Home Depot is the company investors love to hate. The CEO is overpaid. The board is isolated. A drop in new home building and home sales are doing damage to HD's chances for continued growth.

HD said that the second half would be tough when its announced earnings today, but it also said its relatively new plan to sell to contractors was working and helped sales in the most recent quarter. Earnings rose to $1.86 billion from $1.77 billion in the quarter a year ago. Earnings rose almost 17% to $26 billion, and that is impressive.

Sales at stores open at least a year were flat, but, in a down housing market and with high gas prices hurting most retails, flat is a victory. The news coming out of Toll Brothers and Pulte would almost make investors think that no more houses will be sold, ever.

The forecast for sales to be at the lower end of the range for the second half may hurt that stock, but even at those reduced growth rates, the big home supply company is successfully fighting an economic headwind.

The stock is near its 52 week low of just above $33. If its sells off, there may be a reward for owning its at $30.

Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own stocks in companies that he writes about.