Home Depot is On Sale Ahead of Earnings

Home Depot (NYSE: HD) has undoubtedly been a pandemic winner, with shares trading well above pre-pandemic levels. Four tailwinds responsible for the home improvement retailer’s success in 2020 are:

  1. Bored homeowners turning into enthusiastic DIYers.
  2. Home equity loans becoming available at historically low-interest rates.
  3. More homeowners as a consequence of the work-at-home
  4. Stimulus checks getting applied to home improvement.

So, when the vaccine news hit the airwaves, HD shareholders weren’t too happy; shares dipped 5% last Monday – on heavy volume. Over the next four sessions, HD clawed back some of those losses, but still closed the week down 2.5%

Home Depot is set to release its Q3 earnings tomorrow. I’m expecting a strong quarter, but more importantly, I’m optimistic about the company’s post-COVID outlook.

Most of the Tailwinds Aren’t Going Away

Looking at the aforementioned tailwinds one-by-one, it’s clear that Home Depot investors shouldn’t fear a post-vaccine world:

1. Bored homeowners turning into enthusiastic DIYers.

People will, post-vaccine, have a lot more ways to spend their time. No debate there. But if you’ve ever owned a home, you know that something tends to happen when you start working on it: You find other problems or areas for improvement.

Home Depot, for its part, isn’t sitting idly by. Instead, the company is investing in its digital presence, increasing the likelihood of repeat customers. On the last earnings call, VP Ted Decker said, “During the second quarter, our mobile app saw a record number of downloads, and we saw significant growth in conversion rates across all digital platforms.”

2. Home equity loans becoming available at historically low-interest rates.

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