The Home Depot is firing on all cylinder’s these days as this big box retailer continues to build significant cash from operations. Similar to Lowe’s (NYSE: LOW), the home improvement specialty retailers are significantly exposed to the overall health of the economy. But on the other hand, they are also some of the most insulated retailers from the online shopping phenomenon that is currently playing out. The reason for this is quite simple: the Amazon’s (NASDAQ: AMZN) of the world aren’t likely to want to get into the business of same-day delivery of bulk items like wood and other home building materials. Maybe some day, but not yet!
With all the cash it generates, Home Depot has been giving the majority back to shareholders in the form of growing dividends and large share buy backs programs (see Sources & Uses graph above). This is the type of business that we love here at LongTrend.