The home improvement rebound is far from dead. The increase in "DIY" home improvement sales in 2020 was more than robust, and companies like Home Depot (NYSE:HD) have certainly seen a well-deserved valuation bump. This past year, shares of Home Depot are up more than 20%, and are almost double their lows from March when this stock sold off substantially on pandemic-related worries.
Home Depot has thus far proven itself as one of the most "stay-at-home-resistant" stocks on the market, with investors betting against the spending power of the homeowner and the willingness to take on new projects in difficult economic times. While the economy certainly isn’t great, the fact that folks are working so much from home and spending a lot more time in their basements, finally finishing those walls or tackling that painting project has become more important than ever.
I think that the longer the pandemic goes, the longer the runway for outsized performance from Home Depot. This is, therefore, a very defensive and counter-cyclical stock right now, and could be a great choice for investors concerned about the potential for volatility on the horizon.
That said, Home Depot’s stock isn’t cheap, and the company is trading at a reasonable valuation, so should something spook the market, we could see a mass selloff affecting all stocks to also hurt Home Depot in the short-term.
Invest wisely, my friends.
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