Is this Unstoppable Stock Worth Buying Right Now? See How $1,000 Transformed into $32 Million

Is this Unstoppable Stock Worth Buying Right Now? See How ,000 Transformed into  Million

Investing in the stock market works best when people adopt a truly long-term mindset. With a time horizon measured in decades, rather than days or months, investors can enjoy the magic of composition.

Historically, the S&P500 produced an average annual return of approximately 10%, including dividends. But some companies completely crushed that gain.

In fact, $1,000 invested in one of the top retail stocks at its initial public offering (IPO) in September 1981 would be worth nearly $32 million today. Let’s learn more about the rise of this company and whether the shares are a smart buy today.

Boring business; exciting feedback

Investors might be surprised to learn that the stock that has produced such a fantastic return is none other than Home deposit (NYSE:HD). The company sells renovation products to both DIYers and professionals through its network of stores. It is the leader in its sector, well ahead of its smaller rival. Lowes.

The key to the stock’s impressive performance has been the expansion of the store’s footprint. Today, the chain has 2,335 stores, the vast majority of which are in the United States. The company says 90 percent of the U.S. population lives within 10 miles of a Home Depot.

Thirty years ago, there were only 264 stores. Seeing the potential for rapid expansion and replication of the business model, it is no wonder that leaders are investing aggressively in growth. Consistent gains in revenue and profits have helped propel the stock.

Is this Unstoppable Stock Worth Buying Right Now? See How ,000 Transformed into  Million

HD Earnings Chart (TTM)

HD Revenue (TTM) data by Y Charts

At its current scale, the retailer is incredibly profitable. It generated $15 billion in net income and $21 billion in operating cash flow in fiscal 2023, which ended in January 2024, numbers astronomically higher than during the IPO .

And the management team has shown that it prioritizes returning capital to shareholders. Over the past 24 months, Home Depot has paid $16 billion in dividends and the stock currently yields about 2%. It has paid a dividend in 148 consecutive quarters, helping to increase shareholder returns and propel those $1,000s into the millions.

Is Home Depot stock to buy now?

More recently, owning Home Depot stock hasn’t been as exciting. But the stock still rewarded investors. It has more than doubled in the last five years and almost quintupled in the last decade (as of March 26). These gains exceed the S&P 500.

Still, it’s prudent not to expect the stock’s future to resemble the past. The company carries a huge market capitalization of $379 billion and it generated $153 billion in sales in fiscal 2023. Growth has slowed and will continue to do so.

The company is facing a slowdown following a surge in demand for renovation projects during the early days of the pandemic lockdown. Revenue declined 3% in the last fiscal year, with management expecting a 1% increase in the current fiscal year. Investors might be hesitant to pay a price-to-earnings ratio of 25 for a company that is not currently growing.

But I still think this is a smart buying opportunity for long-term investors. Home Depot dominates its industry, has a strong brand, and has the resources to grow its supply chain and omnichannel capabilities.

The result is that the company will continue to be second to none when it comes to serving its customers. This should help it continue to take market share in the $950 billion home improvement sector, and oOnce economic headwinds subside, Home Depot should return to its usual growth. Investors will likely be rewarded.

Should you invest $1,000 in Home Depot right now?

Before buying stock in Home Depot, consider this:

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Neil Patel and its clients have no position in any of the stocks mentioned. The Motley Fool posts and recommends Home Depot. The Motley Fool recommends Lowe’s Companies. The Motley Fool has a disclosure policy.

1 unstoppable action that transformed $1,000 into $32 million. Should you buy it now? was originally published by The Motley Fool

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