Home Depot $HD, a highly regarded cornerstone holding of the Dow Jones for many years, is something that has caught my eye and is becoming quite a compelling starter position at these levels. A strong business model with a wide moat, dominant scale in Pro and DIY ecosystems, resilient FCF conversion, a generally low beta, low risk play with high ROIC, smart capital allocation and a lower PE of ~20 as it sits roughly 15% below its 10-year median PE. Generally speaking, it would seem the stock has been dragging since its SRS distribution acquisition, which subsequently halted buybacks due to elevated levels of debt. Additionally, high mortgage rates and depressed home sales numbers are creating cyclical drag for Home Depot (this, on top of the fact that it’s not an AI/semis company so wallstreet doesn’t care about it lol). I have aimed to derisk my profile over the past few months, with a lot of work yet to be done (we need another major SaaS rally ) but additions and constant DCAing into names like Home Depot, Autozone, McDonalds, Berkshire Hathaway, S & P Global, Mastercard, etc… have all been individual efforts to derisk and find value in compounders, and this one may soon be a new addition.
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