Home improvement retailer Home Depot (HD) gave HD stock holders plenty of information to sink their teeth into Wednesday at its 2013 investor and analyst conference.
Home Depot reaffirmed its sales and earnings guidance and discussed its progress in key strategic priorities. HD expects sales to be about 6% higher for the year, and diluted earnings per share should finished approximately 24% better (to $3.72). Same-store sales should be up about 7%.
For fiscal year 2014, Home Depot currently sees sales growing 5% from the current year, and EPS to be higher by about 17%. This compares favorably vs. analysts expectations of sales growth of 4.7% and EPS growth of 17.9%.
During the conference, Home Depot also said it has plans to add eight new stores (to its current 2,260) in 2014 and has a share repurchase program in place for a total of $5 billion.
Despite the largest down-day in the S&P 500 since November, HD stock on Wednesday managed to rise 0.5%, showing relative strength and, on the chart, holding a first important support line.
Like many stocks out there, HD stock currently is a tale of two time frames.
On one hand, as we will see on the long-term chart below, HD stock has rallied big on deteriorating momentum since spring. However, the near-term charts still show a bullish tone that is hard to ignore.
In March, HD stock managed to break past its previous all-time highs from 2000 as it pushed higher along with the rest of the U.S. stock market. However, with the breakout, Home Depot’s upside momentum began to decline, as indicated by the Relative Strength Index in the bottom half of the chart. The declining momentum is understandable as HD stock began to build a base above the breakout point — thus, shares are beginning to offer a better risk/reward prospect to investors with medium- to longer-term time frames.
So on the long-term chart, the declining momentum has mostly been the result of HD stock taking a breather and settling into a technically sound consolidation pattern.
If we then zoom in closer on Home Depot’s daily chart, we see that since May, HD stock has bumped into a defined resistance area between $81 and $82 three times thus far. As I often allude to, the more often a resistance/support area gets tested, the more powerful its eventual breakthrough.
If and when HD stock can rally to a daily close above $80 — which I have set as an alert target on my trading platform — the chances of a move toward new all-time highs dramatically increase.
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Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the Essence of Swing Trading e-book by clicking here. As of this writing, he did not hold a position in any of the aforementioned securities.