Home Depot (NYSE: HD) is moving higher on the combined forces of outperformance and an expectation for tailwinds to develop in 2025. Better-than-expected consumer trends, acquisitions, and the pro-business drive outperformance in 2024, leading the company to improve guidance against a backdrop of negative sentiment. Tailwinds will form in 2025 as policy headwinds ease and Trump’s business and consumer-friendly policies spur activity, specifically in the housing market.
The forecast for interest rate cuts has eased from its peaks set a few months ago but remains favorable, with the base rate expected to fall another 50 basis points or more by the end of the year. The takeaway for investors is that Home Depot outperforms and builds leverage through acquisitions ahead of an expected shift in economic fundamentals. It raised guidance for 2024, and the forecasts for 2025 are likely cautious because of tailwinds expected to develop. That means the stock is positioned for the analysts' upgrade cycle to continue, and with the stock already near record highs, a new high is likely. The technical indications suggest an additional 12% advance once the critical resistance is broken, and a larger 35% gain is possible over the next four quarters.
