Retail sales in November were up 0.2%, according to the U.S. Census Bureau’s most recent report. Meanwhile, consumers also reported increased optimism in the economy overall, according to the University of Michigan’s December Consumer Sentiment Index. While both reports released during the Dec. 11 week were broadly positive, each slightly missed economists’ expectations as the retail sector overall continues to see a trend towards lower sales forecasts for the 2015 holiday season.
While sales in the retail sector overall have been trending downward, Home Depot (HD, Financial) has continued to gain. With mortgage rates at all-time lows and the housing market a lead catalyst for the economy, Home Depot has been emerging as one of the retail sectors best performing stocks. Specifically in December as companies focus on their holiday sales forecasts with broad downgrades, Home Depot has gained, posting strong results and continued positive forward guidance.
On Dec. 8 the company held its annual investor day which discussed in detail its interconnected retail initiative centered around a focus on three main business themes: customer experience, product authority and productivity. Home Depot's continued focus on its three main business themes has been the key driver for the company’s recent success. Capitalizing on the increased opportunity in housing, the firm has also utilized these three key themes to help it significantly increase sales among its professional customers.
Home Depot reaffirmed its sales forecast for the 2015 year with sales revenue expected to report growth of 5.7% and EPS expected to improve 14% over the previous year. The firm also reported continued growth expected over the next three years with a forecasted compound annual growth rate of 4.7% through 2018.
Year-to-date, Home Depot’s stock has gained 24.26%. Since Nov. 1 the stock is also up significantly with a gain of 5.5%. The stock is also widely held by investors. Currently, Pioneer Investments (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) of Fisher Investments are two of the firm’s largest shareholders. Pioneer Investments (Trades, Portfolio) holds 0.27% of the company’s outstanding stock, while Ken Fisher (Trades, Portfolio) holds 0.66%.
Disclosure: I do not hold any shares of Home Depot.
