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Home Depot Inc. (HD): Are Hedge Funds Right About This Stock?

Macroeconomic fundamentals in the U.S. economy and housing market are the primary drivers of Home Depot Inc. (NYSE:HD)’s financial performance. Interestingly enough, some analysts and investors consider the home improvement retailer as an appropriate barometer for the U.S. housing market and the world’s largest economy in general. U.S. companies added 242,000 jobs in February, more than the gains of 172,000 jobs registered in January. The jobs market has been constantly tightening and the U.S. housing market continues its recovery from the aftermath of the financial crisis, so Home Depot appears to be well-positioned to keep growing in the quarters ahead. The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the final quarter of 2015, which unveil their equity positions as of December 31. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Home Depot Inc. (NYSE:HD).

Home Depot Inc. (NYSE:HD) has experienced a decrease in enthusiasm from smart money in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Intel Corporation (NASDAQ:INTC), Citigroup Inc. (NYSE:C), and HSBC Holdings plc (ADR) (NYSE:HSBC) to gather more data points.

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Today there are several metrics that market participants employ to grade stocks. A duo of the less utilized metrics are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass their index-focused peers by a significant margin (see the details here).

The shares of Home Depot are up by 9% over the past 12 months, despite plunging on fears that the U.S. economy would enter a “recession” mode in 2016. However, those worries and concerns have alleviated in the past several weeks, mainly owing to strong fresh economic data. Home Depot Inc. (NYSE:HD) generated net sales of $88.52 billion during fiscal 2015 that ended January 31, up from the $83.18 billion reported for fiscal 2014. This top-line growth reflects the “continued recovery in the U.S. housing market”. Similarly, the company’s comparable store sales increased 5.6% year-on-year, while comparable sales for U.S. stores grew at a more attractive rate of 7.1% year-on-year. In the meantime, Home Depot’s earnings per diluted share for fiscal 2015 totaled $5.46, which marked an increase of 15.9% year-over-year.

Keeping this in mind, let’s review the key action surrounding Home Depot Inc. (NYSE:HD), as well as discuss whether the stock represents an attractive buying opportunity.

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