3 Stocks to Watch This Week
This week will big for retail, as multiple major names are reporting earnings results. Home Depot (NYSE: HD) should give us a clue to the state of the housing market, in terms of home investments. Kohl's (NYSE: KSS) will show us how brick-and-mortar clothing is faring. And we'll get to see if Target (NYSE: TGT) can continue the nice run it's been on.
Home Depot is arguably one of the best investments you could have made over the past decade. Since the end of 2011, shares have handily outpaced the S&P 500. More recently, however, analysts have begun to grow more cautious on the home-goods titan. Guggenheim downgraded the stock to "neutral" in September, based on concerns that the company's investments in stores, online growth, and the supply chain would hamper margin.
One could debate the short-term pain versus the long-term merits of investing $5.4 billion into the business. But as I see it, it certainly beats spending money on share buybacks, something that Home Depot has a habit of doing. Larger concerns arise from the health of the balance sheet, as Home Depot was running a total stockholder deficit of $1.16 billion at the end of the second quarter. While sales revenue has rose 3.3% through the first half of the year, and net income is up 1.4%, one must wonder what will happen to the shares if things were to slow down.
Source Fool.com
