Home Depot Rises as Honey-Do Lists Expand

This upgrade comes on the heels of Home Depot's earnings announcement on May 18, when the company announced earnings of $0.45, topping the consensus estimate of $0.40, and revenue of $16.9 billion -- a 4.3% increase from the same period last year.

According to management, the positive results were due, in large part, to an increase in spending on springtime gardening and for basic home-improvement projects, like painting.

Management has also revised its outlook for rest of the year. The company now expects to increase revenue by 3.5%, instead of 2.5%, and to earn $1.88 per share, instead of $1.79, during fiscal 2011.

The recommendation from Longbow also falls right in line with the recent upgrades FBR Capital and Credit Suisse gave the stock. Both firms upgraded Home Depot to outperform last month and set price targets of $40 and $41, respectively.

Looking at the chart of Home Depot, the stock rallied off of support at $32 yesterday and moved back above its 20-day and 50-day moving averages. It now faces resistance at $36, the same level it failed to break through in April and earlier this month.

Disclosure: I do not own shares of Home Depot. Positions may change without notice.