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The Home Depot, Inc. (HD) Is Where Investors Ought To Be

The beleaguered department store chain said it’s mulling shedding its protection agreement business in an effort to shore up cash. The unit runs the part of the business that sells service contracts that guarantees to fix or replace appliances should they fail within a certain time-frame.

New initiatives, which include a loyalty program called “Shop Your Way” and “WhyNotLeaseIt,” which allows shoppers unable to get credit the ability to lease big purchases like electronics, home appliances and furniture, has done little to goose sales.And store changes, including providing sales staff with iPads and iPods to help customer more efficiently, have had little effect.

Many question its future.

“Sears Holdings Corp (NASDAQ:SHLD) is becoming more irrelevant by the day,” Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors, told the Associated Press following the glum earnings report.

Prospects for the company’s and its some 2,500 retail operations in the United States and Canada are dreary. While Sears moved to restore profitably by slashing costs, reducing inventory, selling assets and spinning off others, stores continue to struggle.

The consensus view on Wall Street is Sears Holdings Corp (NASDAQ:SHLD) will continue to disappoint investors.

Building on Success

Conversely, The Home Depot, Inc. (NYSE:HD) is viewed much more favorably.

The retail behemoth had 19% of the U.S. home improvement retail market at the end of 2012, compared to Lowe’s 16.7%, data from Euromonitor International showed. That divide is expected to increase.

“Given the company’s strong internal momentum and a developing external tailwind in housing,” Credit Suisse expects Home Depot’s sales to accelerate this year and rates shares an “Outperform.”

Shares have risen to a near 52 week high and yield a good 1.97%.

A good home must be made, not bought. You can build on that truism by buying shares in a good home improvement company like The Home Depot, Inc. (NYSE:HD).

The article Home Depot Is Where Investors Ought To Be originally appeared on and is written by Diane Alter.

Diane Alter has no position in any stocks mentioned. The Motley Fool recommends Home Depot, Lowe’s, and Nucor. Diane is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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