When stocks rise on seemingly bad news, it is a "pretty good indication" that the stock has bottomed, observes Chuck Carlson, editor of The DRIP Investor.
In this case, the stock that may have bottomed is Home Depot (NYSE: HD), which has held up well despite poor earnings, poor guidance, and generally poor prospects for the housing sector.
The company recently reported a 5% drop in same store sales, notes Carlson, and the "pain" is expected to continue into 2007. For the fiscal fourth quarter, the company has forecast a 12% to 16% drop in earnings per share and a gross margin decline.
Says Carlson: "Despite the tough earnings report and weak near-term outlook, these shares held tough and even bounced a bit on the news."
Meanwhile, the advisor sees "ample value" in the shares and expects the stock to perform much better in the year ahead. He also notes that the firm "sweetened the dividend pot" for its shareholders by recently announcing a 50% increase in the dividend. Indeed, he points out, this was the second time in 2006 that the company boosted its dividend 50%.
Incidentally, in Carlson's newsletter, DRIP refers to dividend reinvestment plans; his service focuses exclusively on quality stocks that offer these programs. DRIPs provide a low-cost way for individuals to acquire shares. For example, at Home Depot, the company's direct-purchase plan has a minimum initial investment of $500, with subsequent investments that can be as little at $50.
Steven Halpern is the editor of TheStockAdvisors, a free daily overview of the latest investment ideas from the financial newsletter community.











Reader Comments (Page 1 of 1)
11-29-2006 @ 10:06PM
Dave said...
Home Depot has gone down hill the past few years. I went to the one near my house, and as usual; there was only one register open at 3:00 pm. To my surprise when I looked up and noticed there were only three registers in the store and there were 4-6 self check-out registers installed. Bad customer service in my mind. Oh did I mention the Front End Manager sitting on her butt bull sh*ting with other employees while the line was growing four or five people deep! I cannot wait for the Lowes to be open!!!
11-30-2006 @ 7:16AM
E. West said...
We recently purchased some large appliances from Home
Depot, and were surprised, and upset, when they refused to accept a cashiers check for payment.
Then, these same appliances went on sale the very next day. And, we had asked if there was a sale in the near future before we bought. When we asked to talk to the manager, he would not talk to us personally, only by phone. Also agree there are not enough checkout lines open when needed, or enough knowledgeable people to help with questions, etc.
This is a poor way to run a business.
11-30-2006 @ 9:06AM
Rob said...
Blame all of Home Depot's woes on Bob Nardelli. He takes home mega bucks in bonuses while cutting out all employee incentives and cutting hours. Recently, HD made a big announcement that they were adding 1000 new employees! Sounds great until you realize there are almost 2000 stores in the US, resulting in less than one new employee per store, and you can bet that new employee will be part time. The net improvement is negligible.
12-02-2006 @ 9:19AM
Garrett said...
My wife purchased 2 appliances (high end) for the kitchen $5800.00 for both. I went to see what she had picked, on my way I noticed a competitor with 10% all appliances, bottom line, they did not want me to return the order, they lowered the price and took the 10% the new order for the same items $4300.00. HD is hurting, now is the time to take advantage of the soft housing market with the consumer markets.
11-30-2006 @ 11:34AM
Frank Shore said...
Home Depot managers are never at the store. Even when they are at the store, you can wait for hours and never get to speak to them. They hide from customers. Even when you get to speak to a manager, you are more likely to be scolded for not being happy you have to spend your entire life at Home Depot to be helped than actually get any consideration.
The CEO of Home Depot, Bob Nardelli, is the problem. I would not own Home Depot stock until he is gone.
Home Depot employees at many locations are hostile. Their primary job is stocking isles not helping customers. They resent helping customers. They resent any customers asking to speak to an assisntant manager.
If I have to buy four items, I often have to go to three different Home Depots to get them.
Hardware is often in disarray and misplaced on Home Depot shelves.
Home Depot Headquarters has no customer service manager.
Many Home Depot employees hate their job.
Home Depot should probably be renamed "Home De-Pot"
They give huge amounts of credit to people who have poor credit records.
I've spoken to Home Depot executives, and found many have a callus attitude toward customer service.
I once bought a load of what I thought were 8' long 2'x4's. But when I got them to the job site, I discovered they all were a few inches short. I later learned, they are called "studs" and sold this way. I immediated returned to the store with the lumber and my receipt. The return cashier wouldn't take them back because she thought I cut them them short myself. I was told a manager would come to the return counter to help with the return. I had a crew of ten people waiting for me at the job site to return with a new load of 8' long 2x4's. I waited 45 minutes at the return counter and still no manager. Home Depot would not let me leave the 2x4s at their store, and I had no room in my truck for another load. So, I had to dump the 2x4s elsewhere, and buy new 2x4s that were a full eight feet. It would have cost more in lost wages if I had taken the short 2x4s back to the job site.
An executive vice president at the Home Depot corporate office sided with the store, and said Home Depot does not have to accept any returns even with a receipt even the same day. Not only did they not offer to make good on my loss, they did not apologize for the store's conduct.
With people like this running Home Depot who in their right mind would buy their stock?
11-30-2006 @ 4:59PM
Frank Shore said...
Home Depot managers are never at the store. Even when they are at the store, you can wait for hours and never get to speak to them. They hide from customers. Even when you get to speak to a manager, you are more likely to be scolded for not being happy you have to spend your entire life at Home Depot to be helped than actually get any consideration.
The CEO of Home Depot, Bob Nardelli, is the problem. I would not own Home Depot stock until he is gone.
Home Depot employees at many locations are hostile. Their primary job is stocking isles not helping customers. They resent helping customers. They resent any customers asking to speak to an assisntant manager.
If I have to buy four items, I often have to go to three different Home Depots to get them.
Hardware is often in disarray and misplaced on Home Depot shelves.
Home Depot Headquarters has no customer service manager.
Many Home Depot employees hate their job.
Home Depot should probably be renamed "Home De-Pot"
They give huge amounts of credit to people who have poor credit records.
I've spoken to Home Depot executives, and found many have a callus attitude toward customer service.
I once bought a load of what I thought were 8' long 2'x4's. But when I got them to the job site, I discovered they all were a few inches short. I later learned, they are called "studs" and sold this way. I immediated returned to the store with the lumber and my receipt. The return cashier wouldn't take them back because she thought I cut them them short myself. I was told a manager would come to the return counter to help with the return. I had a crew of ten people waiting for me at the job site to return with a new load of 8' long 2x4's. I waited 45 minutes at the return counter and still no manager. Home Depot would not let me leave the 2x4s at their store, and I had no room in my truck for another load. So, I had to dump the 2x4s elsewhere, and buy new 2x4s that were a full eight feet. It would have cost more in lost wages if I had taken the short 2x4s back to the job site.
An executive vice president at the Home Depot corporate office sided with the store, and said Home Depot does not have to accept any returns even with a receipt even the same day. Not only did they not offer to make good on my loss, they did not apologize for the store's conduct.
With people like this running Home Depot who in their right mind would buy their stock?
11-30-2006 @ 11:44AM
Frank Shore said...
Home Depot managers are never at the store. Even when they are at the store, you can wait for hours and never get to speak to them. They hide from customers. Even when you get to speak to a manager, you are more likely to be scolded for not being happy you have to spend your entire life at Home Depot to be helped than actually get any consideration.
The CEO of Home Depot, Bob Nardelli, is the problem. I would not own Home Depot stock until he is gone.
Home Depot employees at many locations are hostile. Their primary job is stocking isles not helping customers. They resent helping customers. They resent any customers asking to speak to an assisntant manager.
If I have to buy four items, I often have to go to three different Home Depots to get them.
Hardware is often in disarray and misplaced on Home Depot shelves.
Home Depot Headquarters has no customer service manager.
Many Home Depot employees hate their job.
Home Depot should probably be renamed "Home De-Pot"
They give huge amounts of credit to people who have poor credit records.
I've spoken to Home Depot executives, and found many have a callus attitude toward customer service.
I once bought a load of what I thought were 8' long 2'x4's. But when I got them to the job site, I discovered they all were a few inches short. I later learned, they are called "studs" and sold this way. I immediated returned to the store with the lumber and my receipt. The return cashier wouldn't take them back because she thought I cut them them short myself. I was told a manager would come to the return counter to help with the return. I had a crew of ten people waiting for me at the job site to return with a new load of 8' long 2x4's. I waited 45 minutes at the return counter and still no manager. Home Depot would not let me leave the 2x4s at their store, and I had no room in my truck for another load. So, I had to dump the 2x4s elsewhere, and buy new 2x4s that were a full eight feet. It would have cost more in lost wages if I had taken the short 2x4s back to the job site.
An executive vice president at the Home Depot corporate office sided with the store, and said Home Depot does not have to accept any returns even with a receipt even the same day. Not only did they not offer to make good on my loss, they did not apologize for the store's conduct.
With people like this running Home Depot who in their right mind would buy their stock?
11-30-2006 @ 11:45AM
R Riley said...
Home Depot has become a failed corporation due to the managements loss of interest in the customer and its loss of focus. They need to remember the origional mission of the founder.
11-30-2006 @ 12:47PM
Jeff Clancy said...
Home Depot does not have a good reputation in this area. The employee's lack knowledge, customer service and experience with equipment. The employee's make it clear training is done by the untrained and the store is more of just a storage bldg. We see 3 to 4 employee's standing around complaining more than we see helping. Good companies are built by good people. Sell this stock while you still can. It's going to tumble
12-01-2006 @ 8:59PM
Jim said...
I purchased 2 Kohler products at HD and was advised I would receive a $25 gift card. Sent in the UPCs, the SKUs, the receipts but the gift card was declined because of their admitted computer error.
2 trips to the retail store, 4 calls to the rebate center, 7 emails & 1 fax still no gift card.
FRAUD!! They will not honor their own offer. Is it worth contacting the BBB or small claims? Pretty silly for $25. I am now a Lowe's customer.
11-30-2006 @ 9:47PM
lou spada said...
the employees at HD are like cockroaches. they scatter
when you come by. I always have a problem returning
things at HD. aT LOWES THEY TAKE ANYTHING BACK.
11-30-2006 @ 9:52PM
Rick Hinton said...
They don't call them "do it yourself" stores for no reason.It behooves the consumer to at least have a rudimentary knowledge of the products and services they are seeking .Conversely these stores can not adequately serve thier customers if the employees they have aren't knowledgeable of the same .The problem: too much pressure to boost the bottom line.It is easier to cut payroll /training hire less than qualified employees and have them multi tasking to the detrement of customer service (provided they were capable in the first place).A better trained and focused work force can add revenue to any business,while not having them may boost gains along with gimmick sales ,in the long run the desired result will be lost.The focus on any sound stucture starts with a solid base(your front line sales/stock help)they make up the bulk of your personnel)With the right workforce in place you could make a chimp CEO pay him in bananas and redistribute the outlandish salaries to attract qualified help.Really would you take the rebar and wire mesh out of your foundation so you could build a marble / gold bath only to have the floors crumble beneath you!!
11-30-2006 @ 10:26PM
Richard Goldstein said...
I was a big fan of Home Dep0ot several years ago. The workers were all helpful and usually well versed in their departments. Carpenters, plumbers, painters etc. were hired and trained to be helpful.
Things have changed in the last few years. As the company cut costs they started to hire workers who have very little understanding in their departments. I now only go there when nowhere else is open. Its major attraction, helpful employees, is now a distraction.
Don't ever try to order a special order item. It never comes when promised and one never gets a straight answer as to why or when it might come. Had that problem with a shower door.
Nothing beats the old fashioned hardware or plumbing store for quality and helpfulness. Although I'd pick Lowes over Home Depot any time. I don't understand how the stock canever go up.
12-01-2006 @ 6:43AM
Carl Arguell said...
As a contractor and a Home Depot customer for over twenty years I still remember the good ole days. That was when you could visit a store, find a friendly, polite, knowledgable associate to help you. Well friend those days are sadly way in the past. I live in New Jersey and have found that all the posted comments are very true. The thing about the stock though is people will still buy it, because you still have to buy home improvement goods. Take it from me most Lowe's stores are getting to be the same. Poor service, high employee turnover, stock outs, etc. The big problem in the usa is us, yes we the consumers who can't get together in mass and just say F U to all the store that are like this. Be honest this condition exists in most big box retail. But we the consumer keep taking it on the chin because we don't unite and boycott these places. Oh for but a dream, a day nationwide where NO ONE set foot in a retail store. Yep that would get their attention. But there is always some smuck like my self that is a glutton for punishment and goes back.
12-01-2006 @ 9:47AM
JLamb said...
I've never had a problem finding any help at HD. I've never had a problem returning something, HD has always been courteous and fully refunding my money - no questions asked. Lowe's - well I've never been able to find help - AT ALL! I swore off Lowe's a year ago after going back from a previous year's layoff to try them again - and LOWE and behold, no one to assist me - AT ALL! Home Depot is my store and I'm happy they are around. Sometimes, you just have to be patient - they get very busy too.
12-01-2006 @ 9:46AM
lem w nash said...
home depot sucks. everything bad about them I think
has been said in the previous comments. No customer
service, no manager available, no competent help
EVER available. Lets hope they get a takeover bid.
12-01-2006 @ 9:13PM
Tim said...
I am a Home Depot Employee -- I hate my Job! It is full-time, in tool rentals. We end up swallowing a lot of bullshit. Pay is horrible, the hours are bad (there are no normal shifts, either very early start or a late finish), the managers don't treat the employees very well....
Judge for yourself, but I advice not to invest.
12-05-2006 @ 8:17PM
dan woods said...
where I live the HD store is well stocked and the employees are fairly knowledgeable. Having spent most of my life in retail I know that when a customer is upset that they will respond more often than a satisfied customer, evidence the negativity on this blog. The problem in retail stores, not just in HD is the quality of the job market. At present it appears to be the domain of the disenchanted,presently laidoff[downsized],immigrants,etc. that need time to acclimate themselves. Lowes is no better or worse in this regard and HD is still best of breed in all other areas with the possible exception of the ceo position. HD is worth every bit of a $44 to $50 a share price on just about any type of valuation measurement you can use.If your locale hardware store is so well equipped how is it that it could probably fit in one of HD's aisles.I wouldn't even discuss the price disparity between the two.
12-05-2006 @ 4:31PM
James said...
I am currently building a house and bought several ceiling fans at our local Home Depot. When we were installing them, one light kit for a fan (packaged together) was broken. The fan itself was already installed. We thought we would have to uninstall the fan and take the whole assembly back, but we took just the kit back to try and exchange it for a new one. They sent us back to that department, opened up a new one, checked to make sure it was not broken, and we were on our way in less than 5 minutes. This is a typical experience for me at both of our local stores, and while I do sometimes shop at Lowe's also, I think overall Home Depot does a pretty good job.
I also have a friend that recently went back because a part was missing on a yard roller for his lawn tractor when he opened the box. They simply gave him the one off of the display model so he would not have to disasemble and return his.
1-09-2007 @ 8:10AM
Crash Craddock said...
What about dogs? HD allows folks to bring their dogs to the store and parade them around to server their egos .. and us to fall over. When I ask if I can bring my cat in, or my horse, they say no. Isn't that animal discrimination? Please don't misunderstand me, I love dogs (and small children) but not under the wheels of a cart loaded with lumber.