What a Black Friday blowout could mean for Home Depot
This holiday shopping season, Home Depot is looking to regain some momentum after a disappointing year. The home improvement retailer’s Black Friday promotions, which end Wednesday, are aimed at driving traffic after a soft third quarter in which rival Lowe’s outperformed on same-store sales. Both companies were cautious with their forward guidance. “I admit that I’m in Home Depot for my Charitable Trust, and I actually wish I were in Lowe’s ,” Jim Cramer said on CNBC last week, shortly after Lowe’s post-earnings stock pop. However, Jim has said that Home Depot is the best play on lower rates in the Trust, which is the portfolio used by the CNBC Investing Club. Home Depot has enough gift sets and holiday decor “to keep the lights on,” Mizuho analyst David Bellinger. “It’s not make or break. But it definitely helps to have these other categories.” While the spring planting season , which coincides with the busiest time for home sales, is the most important time for Home Depot, Bellinger said Black Friday and holiday shopping are still important. To be sure, neither Home Depot nor Lowe’s shares are setting the world on fire amid a strong 2025 for the S & P 500 . Home Depot has dropped more than 8% year to date. Lowe’s has declined by over 1% in 2025. The charts of both stocks had been following a similar pattern. But over the past month, Home Depot’s decline has been greater than Lowe’s. HD LOW YTD mountain Home Depot and Lowe’s YTD As shoppers gear up for post-Thanksgiving shopping, Home Depot is ready to capture those dollars. The company doesn’t provide Black Friday sales data, but during the most recent earnings call, William Bastek, Home Depot’s executive vice president of merchandising, said the company is “looking forward to the excitement” of the annual shopping holiday, citing appliance deals on popular brands like LG, Samsung, Bosch, Whirlpool, GE, and Frigidaire. Bastek also highlighted the company’s gift center events. Back on the February earnings call for the fourth quarter of 2024, Bastek said the holiday events garnered strong engagement, with appliance and gift center events posting record sales. Home Depot saw fourth-quarter 2024 sales of $39.7 billion. Analysts expect revenue in the current fourth quarter of 2025 to drop 4% to $38.09 billion, according to FactSet. A larger part of the company’s strategy is its push to attract professional contractors. The company recently shelled out more than $22 billion in separate deals to acquire both SRS Distribution and GMS. In early September, Home Depot completed its acquisition of GMS and folded it into SRS. So far, the big bets are paying off. According to management, SRS, which caters to roofing pros and has a lucrative trade-credit system, “continues to perform extremely well.” The roofing market, however, is under pressure, leading to flat third-quarter comps for SRS. Home building is also stagnant. But professional clientele is a steadier client base for Home Depot, unlike DIY customers, who are reliant on housing turnover. Home Depot is about 55% pro and 45% do-it-yourself. Lowe’s, known for more DIY, has also moved to be competitive in the pro space, completing its acquisition of Foundation Building Materials last month. FBM distributes building and construction materials. Bellinger admits that while investors appear to be losing some patience with both stocks, there’s still value in them. “I feel like we’re closer to the bottom [for Home Depot and Lowe’s],” said Bellinger, who maintained a buy-equivalent rating on both stocks. For Home Depot specifically, he lowered the price target to $400 from $450. Home Depot erased nearly all its gains from a rally that began in mid-June as expectations for Federal Reserve interest rate cuts ramped up. Investors hoped this year would be different, with rate cuts actually pushing down the 10-year Treasury yield and mortgage rates like they are supposed to. So far, that has not happened in a meaningful way. The home improvement industry is tied to housing, which has been stuck because last year’s Fed rate cuts failed to stem the rise in bond yields and mortgage rates. Despite the Fed’s September and October rate cuts, bond yields and mortgage rates have not declined much. Market odds of another rate cut at next month’s meeting of central bank policymakers are over 80%, according to the CME FedWatch tool . Bottom line Home Depot is the best stock to own once mortgage rates finally drop. In fact, we increased our Home Depot position last week, taking advantage of the stock’s post-earnings decline. “Home Depot did not do what I wanted,” Jim said. “But the stock is too low given the fact that there are going to be rate cuts.” (Jim Cramer’s Charitable Trust is long HD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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