Should Home Depot Be Considered After Q4?

The environment for Home Depot's business model, which competes with Lowe's Companies, Inc. (LOW), is becoming less difficult. I'm not saying that navigating the choppy retail seas is now a task of simplicity; far from it. A lot can go wrong. And with unemployment remaining at unacceptable levels, nothing can be taken for granted.

Then again, Home Depot can attempt to exploit its better circumstances to really go after the consumer that wants to engage the do-it-yourself attitude to cut costs. The key now is for management to accelerate the momentum: improve the shopping experience, market the concept, aggressively focus on cash flows, all that good stuff.

Of course, with today's report, potential investors want to know the answer to the only question that matters: does the current stock price, which is close to a 52-week high, already capture an appropriately discounted value of the future prosperity for the company?

Always a difficult point to ponder. From a trading perspective, yes, much of the growth prospects could be priced in at the moment (if you do want to play the stock, I'd wait for a breakout above the 52-week high).

However, if you are buying with the intent to hold for a while, you could be amply rewarded. Management states in the actual press release that dividend hikes and share repurchases (based on excess cash levels) are on the menu. As the economy continues to improve, so too should the price action in the stock.

Disclosure: I don't own any company mentioned; positions can change without notice.