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Non-Tech : Home Depot (HD)

HD 362.30

-1.6%

Nov 14 9:30 AM EST

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To: Carter Patterson who wrote (177)	5/29/1998 8:55:00 AM
From: Xpiderman	of 1169

The INVESTools Advisory ( investools.com ), May 26-29, 1998 Good Times At Home Improvement Retailer (HD) Friday, May 29, 1998 Times are good at Home Depot (HD). On May 19, the firm reported Q1 earnings that bested Wall Street estimates by $0.02/share, net sales of $7.12 billion vs. $5.66 billion last year, and a seven percent hike in same store sales. A few days later, management announced a two-for-one stock split and boosted their pre-split dividend, and the CEO went on record as "committed to 23-25% growth." Aggressive expansion is fueling this sales boom. Home Depot operates over 620 retail warehouse-style stores; the firm added 32 in Q1 and plans 140 new stores in FY 1999. The firm has plenty of room to grow as it commands just 14% of the highly fragmented, do-it-yourself $135 billion home improvement industry. The industry should grow five percent annually through FY 1999 as analysts estimate over 75 million US homes will need repair. Bernie Schaeffer says Home Depot's compelling business story is reflected in a technical picture so strong that he recommends using options to bet on continued growth. Shares have enjoyed "a monster uptrend" since January 1997 with "near perfect support" along its 50-day moving average (DMA). A bullish cross of the 10- and 20-DMAs indicates the current rally has further to go. Schaeffer also sees an implied volatility of 30% vs. the stock's historical 26% volatility, and he pocketed the difference by collecting a higher premium on the trade.

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