Recession-Proof Your Portfolio with Home Depot Stock

  • Home Depot (HD) stock is trading at a price that should appeal to value-focused investors.
  • The company has withstood macro-level financial shocks and should provide assurance to anyone worried about an imminent recession.
  • Investors should own at least a few shares of Home Depot now.
the outside of a home depot store

Source: Jonathan Weiss / Shutterstock.com

Among the biggest names in home improvement in the U.S. is retail giant Home Depot (NYSE:HD). It’s also a big name among investors, as HD stock is an asset that you can hold for years and not worry about the company collapsing or going bankrupt.

If you don’t already have some shares of Home Depot in your account, now is a great day to consider starting a position. However, some folks might hesitate because they’re worried about an impending recession.

Yes, there is a lot of this talk going around on social media and in the financial headlines — no doubt about that. Does this mean that you should avoid buying HD stock, though?

Not at all. If anything, Home Depot is the idea business to invest in when you’re concerned about potential macroeconomic shocks. Thus, HD stock is one to buy right now.

HD Home Depot $315.14

Reasons to Consider HD Stock

Whether you’re a value-focused investor or you’re interested in collecting consistent income — or maybe both – Home Depot is the right company to entrust your capital with.

You might have read the headlines about yield-curve inversions, or the Federal Reserve ending its accommodative monetary policy. Plus, there are supply-chain bottlenecks and the geopolitical crisis in Ukraine to worry about, not to mention rising inflation.

Think about the companies that survived past crises and continued to generate strong revenue. Even during the financial crisis of 2008 to 2009 and the onset of Covid-19 a couple of years ago, people still shopped at Home Depot stores and the company took in substantial revenue.

Moreover, HD stock rebounded from those crises and eventually printed higher highs. If you’re in it for the long term, Home Depot can truly be your portfolio’s best friend.

Just recently, the Home Depot share price pulled back from $420.61 to the $300 area before popping back up to $315 per share. With that, the company’s trailing 12-month price-earnings (P/E) ratio was 19.61 — indicating a good value.

Plus, Home Depot pays a forward annual dividend yield of 2.5%. Those dividend distributions can help your account stay in the green during challenging economic times.

A Big Earner

If there’s anything you should be looking for in a recession-proof business, it’s earnings growth. Both the top and bottom lines of a company’s financial statements should indicate improvement.

So, does Home Depot measure up to these expectations? The answer is definitely yes, as the company demonstrated in both the fiscal fourth quarter of 2021 as well as full-year 2021.

According to the company’s unaudited results, Home Depot generated $35.7 billion in net sales during 2021’s fourth fiscal quarter — which ended on Jan. 30, 2022. This marks a year-over-year (YOY) improvement of 10.7%.

During that same quarter, Home Depot posted $3.35 billion in net earnings. Consequently, the company showed a YOY increase of 17.3%; Not too shabby.

Additionally, to prove that this quarter wasn’t just a fluke, we can extend the timeline to full-year 2021. During that year, Home Depot pulled in $151.16 billion worth of net sales, up 14.4% YOY.

I saved the best for last, so check this out. In full-year 2021, Home Depot reported $16.43 billion in net earnings, representing a very impressive YOY improvement of 27.7%.

What You Can Do Now

Of course, there’s no way to guarantee that HD stock will be recession-proof. However, it’s one of the best assets to own during a financial downturn.

Unfortunately, some people will stay out of the stock market in 2022 because they’re worried about a potential economic recession. They could end up missing out on some great investment opportunities.

HD stock is one of those opportunities. The company is huge and has name-brand recognition and staying power. Customers shopped at Home Depot during past crises, and the company is a true survivor.

Therefore, informed investors don’t need to park all of their money in cash. It’s perfectly fine to own a stake in Home Depot, which offers terrific value and a rock-solid dividend as a nice bonus.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


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