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Home Depot -- They Can Help Us Make Profits, Too!
For the most part, value investors must be a patient lot. Successful value investing requires a willingness to wait diligently for conditions, economic or business specific, to change. Such a wait can often be many years.
That certainly has been the case with Home Depot (HD). Hit by a double whammy of poor execution and a deep recession in the housing industry, HD has been a dog of a stock for some time now.
Despite a healthy dividend, the company has been unable to attract investors. Fundamentally there is a belief that HD will continue to suffer regardless of a recovery in the housing sector.
That may be a mistake. This pioneer in the home refurbishing space has improved its operating model and is now better positioned to compete against rival Lowes. The tax stimulus plan may flow directly to the company as consumers use the funds to improve their homes.
Eventually the fog will lift and growth in the homebuilding sector will return. Now may be an excellent time to establish a position in HD and patiently wait for positive conditions to return.
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