5 Stocks Smart Investors Buy During Recessions

3. The Home Depot, Inc. (NYSE:HD)

Number of Hedge Fund Holders: 75  

The Home Depot, Inc. (NYSE:HD) is a home improvement retailer. The company has an impressive dividend history stretching back close to three decades. In the past 14 years, these payouts have consistently grown. For an industry where the median in this regard is just one year, this represents the advantage that the stock offers over peers regardless of the economic outlook. On May 19, the firm declared a quarterly dividend of $1.90 per share, in line with previous. The forward yield was 2.64%. 

On May 20, Citi analyst Steven Zaccone kept a Buy rating on The Home Depot, Inc. (NYSE:HD) stock and raised the price target to $348 from $327. The analyst also increased the earning estimates for the firm for the 2022 fiscal year. 

Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in The Home Depot, Inc. (NYSE:HD), with 8.1 million shares worth more than $2.4 billion. 

In its Q1 2022 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and The Home Depot, Inc. (NYSE:HD) was one of them. Here is what the fund said:

“The Home Depot, Inc. (NYSE:HD) (7.7% weight in the Fund): The demand surge for remodeling and home improvement goods sparked by shelter in place orders, remote work going mainstream, and a shortage of homes on the market to buy, ran headlong into the supply chain crisis, triggering surging prices in the products Home Depot sells. But the company has been able to pass nearly all of these increased costs on to customers, with revenue growing 37% over the past two years while gross profits, or the profits the company makes on each item they sell, increased by 35%. Even this small difference appears to be due not to inflation eating away at Home Depot’s profits, but rather be a function of the huge increase in revenue the company has been generating in low margin lumber sales.”