Home Depot is marching its way back to highs.
Its share price has added 7% this year and now sits just 3% from its all-time high set in August. The stock has been one of the best Dow performers over the past year, buoyed by a focus on home improvement during the pandemic.
Those trends should continue to drive Home Depot even higher, according to TradingAnalysis.com founder Todd Gordon.
One reason to be bullish, he says, is the latest housing data. Housing starts and building permits rose in December — up 5.8% and 4.5%, respectively — according to the Commerce Department. Single-family homebuilding starts gained 12% last month, its eighth straight month of growth.
“We’re seeing a continued move away from the urban areas even with the vaccine being rolled out, and I think this work-at-home/stay-at-home with the new technologies available to us is real, and people are building larger houses. So it plays in here,” Gordon told CNBC’s “Trading Nation” on Thursday.
Home Depot earnings should also drive share outperformance, Gordon said. Home Depot trades at 22.7 times forward earnings — the XLY consumer discretionary ETF, which holds Home Depot — trades at 34.6 times. Home Depot’s dividend yield of 2.12% is also appealing to Gordon.
He now eyes $300 as its next target, implying 6% upside from its current price at less than $284. That level would also mark a record high — its last peak was just below $293.
Gordon added to his position on Thursday.
