The Home Depot, Inc. owns and operates 1,101 do-it-yourself warehouse retail stores offering building materials, home improvement products and related furnishings. For the fiscal year ended 1/28/01, net sales rose 19% to $45.74B. Net income rose 11% to $2.58B. Revenues reflect the opening of 204 new stores and increasedcomparable store sales. Earnings were partially offset by an increase in selling and store operating expenses.

May 8, 2001

One area of the economy that has been mostly impervious to the well publicized slowdown has been home building and general home improvement. Just ask anybody you know who is involved in home construction and they will tell you that they have a huge backlog of business. This trend clearly helps Home Depot, the nation's third largest retailer and unquestioned leader of the home improvement supply trade. Also helping Home Depot is the fact that lumber prices are starting to rise again. Rising lumber prices should help Home Depot to show greater than previously expected profits. Speaking of profits, Home Depot is scheduled to report its earnings one week from today before the market opens. Therefore, HD may be on the verge of an earnings expectation run. It might be prudent to wait for HD to trade above today's high of $50.15 before initiating a position. If HD gaps up $1.50 or more on the open, one might want to wait for a subsequent pullback before going long. HD is currently enjoying a very strong MACD that is rising nicely and is pointing towards more gains. Money Flow has also been recently outstanding. Initial support, in the event of a pullback, should probably be found at $48.25, which is right on a rising trendline.

Picked on May 8th @ $50.01
Change since picked +0.00
Stop Loss $45.88

May 15, 2001

This play never really got going for us. This was probably due to the fact that the overall market is stuck in a narrow trading range. The good consumer confidence news last week suggested that Home Depot might be able to exceed analysts earnings estimates when the company reported this morning. Sure enough, Home Depot beat the consensus estimates by 2 pennies by reporting profits of $0.27 a share. If HD can continue to tick up like it did today, we may jump on this stock again.

Picked on May 8th @ $50.01
Profit/Loss -0.86 (2%) (Stopped Monday @ $49.15)
Best Profit +0.24 (0%)

May 13, 2001

A couple of surprisingly strong economic reports helped Home Depot to fend off the sellers that took down other DJIA members during Friday's down draft. The University of Michigan Consumer Sentiment Index rose to 92.6 in mid-May from 88.4 at the end of April. Most economists had expected this index to actually decline. A report from the Commerce Department showed retail sales increased by 0.8 percent in April. Consensus estimates were looking for only a 0.1 percent increase. These numbers were good news for Home Depot, which is the nation's third largest retailer. The news also came just in time to build up a little excitement going into Home Depot's earnings report, which is due Tuesday morning before the market opens. According to Zack's, current consensus estimates are calling for profits of $0.25 a share. As always, we will exit this play no later than Monday's close in an attempt to avoid earnings related volatility. A possible day trade may present itself if HD can trade through $50.25 in the first hour of trading accompanied by volume exceeding 1.5 million shares. If HD gaps up $1.50 or more on the open, one might want to wait for a little pullback in an attempt to get a more advantageous entry price.

Picked on May 8th @ $50.01
Change since picked -0.13
Stop Loss $45.88