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Non-Tech : Home Depot (HD) -- Ignore unavailable to you. Want to Upgrade?

To: Sarkie who wrote (870)	1/7/2000 10:53:00 AM
From: Sarkie	Read Replies (1) \| Respond to of 1169

News January 7, 08:53 Eastern Time quotes.freerealtime.com Home Depot Was Top Georgia Stock of 1990s Jan. 6 (The Atlanta Journal and Constitution/KRTBN)--Think of Home Depot as a money machine. During the last decade, the company's shares appreciated 3,701.2 percent, or at an annual rate of 43.8 percent. That made Home Depot the best performer among Georgia-based companies during the '90s. Nationally, Home Depot was the 13th-best performer among members of the benchmark Standard & Poor's 500-stock index. Only Dell Computer, EMC, Tellabs, Best Buy, Microsoft, Charles Schwab, Sun Microsystems, Applied Materials, MCI WorldCom, Amgen, Oracle and Intel were better. Five other Georgia stocks outperformed the S&P 500 during the decade. They were AFLAC, Scientific-Atlanta, Synovus Financial, Coca-Cola and SunTrust Banks. In the '90s, investors were willing to pay premium prices for the shares of rapidly growing companies. "In bull markets, stocks are going up primarily because price-earnings ratios are expanding," said market strategist Phillip M. Larkins of Legacy South, an Atlanta-based money management firm. "As a general rule, for the typical stock in the '90s, its total return was maybe one-third earnings growth and two-thirds P/E expansion. "In that type of market environment, the stocks that are generally going to outperform are going to be the growth companies." Home Depot has been able to consistently grow its profits at an annual rate of 30 percent or more. "Because of that, the market has rewarded Home Depot with a very liberal expansion of its price-earnings ratio," Larkins said. The retailer's shares are now trading at 62.3 times estimated earnings of 99 cents a share in the fiscal year ending this month. What are the chances of Home Depot's stock repeating its phenomenal performance this decade? "Fairly remote," according to Larkins. "It's hard to duplicate that relative performance decade in and decade out." For one thing, Home Depot is much larger than it was a decade ago. "It's harder to grow at the same rate as you get larger," Larkins said. "If you're a company with $1 billion in sales, it's easy to get up to $2 billion in sales. But it's more difficult to get from $50 billion in sales to $100 billion. The law of mathematics weighs you down as you get larger." Having said that, Larkins said he likes the shares of Home Depot and those of the five other Georgia companies that have outperformed their peers in the S&P 500. "I wouldn't buy them expecting to duplicate their performance of the '90s," Larkins said. "But all six will be good long-term investments." By Robert Luke