A weak sales performance in its recent quarter has Home Depot (NYSE: HD) under pressure, but one technician says to buy here for its likely breakout.
“This weakness is occurring above support and within HD’s turnaround, and we therefore see an opportunity to buy shares,” Ari Wald, head of technical analysis at Oppenheimer, said in an email Tuesday.
The key to its strength lies in its technical performance, Wald added.
The home improvement retailer has outperformed the market in the past month after trailing the Dow Jones industrial average through the start of the year. It is the second-best Dow performer over the past 30 days.
A few technical levels suggest its recent performance should continue, said Wald.
“Home Depot’s 200-day moving average, still rising. This is indicative of a stock in an uptrend,” he said. Its stock is also “moving above $180. This is the first higher high for Home Depot since the correction started.”
The world’s largest home improvement retailer reported sales of $24.9 billion for the first quarter of fiscal 2018, a 4.4% increase from the first quarter of fiscal 2017. Comparable sales for the first quarter of fiscal 2018 were positive 4.2%, and comp sales in the U.S. were positive 3.9%.
Net earnings for the first quarter of fiscal 2018 were $2.4 billion, or $2.08 per diluted share, compared with net earnings of $2.0 billion, or $1.67 per diluted share, in the same period of fiscal 2017.
Home Depot’s shares moved toward the closing bell down $2.58, or 1.4%, to $188.50.
This article provided by NewsEdge.