Jim Cramer Believes “Home Depot’s the Most Sensitive to a Decline in Interest Rates”

The Home Depot, Inc. (NYSE:HD) is one of the stocks Jim Cramer commented on along with the recent macro rally. Cramer showed optimism around the stock in case of a rate cut around the next Fed meeting, as he remarked:

“Of the disappointers, Home Depot’s the most sensitive to a decline in interest rates. The Fed’s meeting’s next week, so things could turn around real fast for the despot, which is higher than where it reported that bad quarter. That’s why we own it for the Charitable Trust.”

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The Home Depot, Inc. (NYSE:HD) is a home improvement retailer that sells tools, building materials, and decor. It also provides installation and equipment rental services. Cramer discussed the stock in detail during the November 20 episode. The Mad Money host said:

“On Tuesday, we kicked things off with Home Depot, and that was an inauspicious start. The despot posted a tiny sales beat, but both its earnings and the same-store sales came in softer than expected, and the stock plunged 6% in response. Ouch. Worse, Home Depot cut its full-year forecast for both comparable sales growth and earnings. There’s a tough set of numbers, no way around it.

Management said that the uptick in demand they were expecting simply didn’t materialize. Some of that’s from ongoing pressure in the housing sector as rates remain elevated. Some of it’s consumer uncertainty. Some of it’s simply because we had a moderate hurricane season, which is great for anyone who lives near the coast but awful for Home Depot’s earnings because they don’t get much rebuilding business. I also wonder if ICE’s high-profile roundups of presumably undocumented immigrants at Home Depot parking lots might be playing a role, too.

I didn’t factor that in well enough, perhaps. Still, there’s a reason we own it for the Charitable Trust, and the Charitable Trust even bought some more as the stock approached a 52-week low on Tuesday. As I see it, there’s a very simple reason to own Home Depot. This company’s a major beneficiary of lower interest rates, and rates are coming down, but it would help if we get the rate cut sooner rather than later. If the Fed doesn’t cut at next month’s meeting, this stock’s going to struggle. I think you saw some of that, too.”

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Disclosure: None. This article is originally published at Insider Monkey.