We recently put together a list of the top 10 Consumer Cyclical Stocks to consider buying right now. In this article, we will focus on The Home Depot, Inc. (NYSE:HD) and how it compares to other consumer cyclical stocks.
Consumer cyclical stocks are closely tied to the economic cycle. It is ideal to purchase them when the economy is in a recession, as their prices are lower, with the anticipation of a recovery and increased consumer spending. Owning consumer cyclical stocks is a bet on the economy growing in the near future, unlike consumer staples or defensive stocks, which act as a hedge against economic downturns.
Due to their higher risk compared to defensive stocks, consumer cyclical stocks offer higher returns but also come with increased risk. Calculating the risk of these stocks can be challenging, as it requires a case-by-case approach considering a firm’s earnings volatility and business model.
Consumer cyclical stocks performance is closely linked to the business cycle. Research shows that these stocks perform best during the early phase of the business cycle, characterized by low interest rates and increased economic activity. Consumer confidence is a key indicator for consumer spending, which influences the performance of cyclical stocks.
Analyzing the performance of consumer cyclical stocks in 2024, we can see a mix of results. The Home Depot, Inc. (NYSE:HD) is one of the largest home improvement retailers in the US and is classified as a cyclical stock due to its ties to the real estate industry. The company’s sales are influenced by the building and construction sector, which performs well in low interest rate and inflation environments.
The Home Depot, Inc. (NYSE:HD) has faced challenges in 2024, with its shares down nearly 2% year-to-date. The company reported a decline in comparable store sales, reflecting the impact of macroeconomic factors on its performance. While The Home Depot, Inc. (NYSE:HD) has a strong cash position, its outlook may be impacted by the current economic environment.
In conclusion, The Home Depot, Inc. (NYSE:HD) ranks 10th on our list of consumer cyclical stocks to buy. While it shows potential as an investment, our focus is on AI stocks for higher returns in a shorter timeframe. For more information on consumer cyclical stocks and investing in AI stocks, check out our reports.
Please note that this article is for informational purposes only and was originally published at Insider Monkey.