1 unstoppable stock that turned $1,000 into $32 million. Should you buy it now? – Business News (Trending Perfect)

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Investing in the stock market works best when people adopt a truly long-term mindset. With a time horizon measured in decades, rather than days or months, investors can benefit from magic Doubles.

Historically, Standard & Poor's 500 It has produced an average annual return of about 10%, including… earnings. But there are some companies that have completely crushed this gain.

In fact, $1,000 was invested in one of the company's top retail stocks Initial public offering (IPO) in September 1981 will be worth approx $32 million today. Let's learn more about this company's rise, as well as whether the stock would be a smart buy today.

boring work; Exciting returns

Investors may be surprised to learn that a stock that has generated such an impressive return is anything but Home Depot (NYSE: HD). The company sells home improvement products to both do-it-yourselfers and professional customers through its network of stores. It is the leader in its industry, far ahead of the smaller competitor Louie.

The key to the stock's impressive performance has been store expansion. Today, the chain has 2,335 stores, the vast majority of which are in the United States. The company says 90% of the American population lives within 10 miles of a Home Depot store.

Thirty years ago, there were only 264 stores. Given the potential to scale and iterate the business model quickly, it's no wonder leadership was investing heavily in growth. Consistent revenue and earnings gains were what helped propel the stock.

HD Revenue Chart (TTM).HD Revenue Chart (TTM).

HD Revenue Chart (TTM).

Revenue HD (TTM) Data by YCharts

At its current scale, the retailer is incredibly profitable. It generated $15 billion in net income and $21 billion in operating cash flow in fiscal 2023, which ended in January 2024, numbers that are astronomically higher than during the IPO.

The executive team has shown that it prioritizes returning capital to shareholders. In the past 24 months, Home Depot has paid $16 billion in dividends, and the stock is currently yielding about 2%. It has paid dividends for 148 consecutive quarters, helping boost shareholder returns and paying $1,000 to millions.

Can Home Depot stock be bought now?

Lately, owning shares of Home Depot hasn't been that exciting. But the stock still rewards investors. That number has doubled in the past five years, and has risen nearly five-fold in the past decade (as of March 26). These gains exceed the S&P 500 Index.

However, it is wise not to expect a stock's future to resemble the past. The company carries huge Market value Valued at $379 billion, it achieved sales of $153 billion in fiscal year 2023. Growth has tapered off and will continue to do so.

The company is dealing with a slowdown after increased demand for renovation projects during the early stay-at-home days of the pandemic. Revenue fell 3% in the last fiscal year, with management expecting a 1% rise in the current fiscal year. Investors may be reluctant to pay a price-to-earnings ratio of $25 for a company that isn't currently growing.

But I still think now represents a smart buying opportunity for long-term investors. Home Depot dominates its industry, has a strong brand, and has the resources to develop its supply chain and omnichannel capabilities.

The result is that the company will remain second to none when it comes to serving its customers. This should help it continue to gain market share in the $950 billion home improvement industryOnce the economic headwinds subside, Home Depot should return to its usual growth record. Investors are likely to be rewarded.

Should you invest $1,000 in Home Depot now?

Before buying stock in Home Depot, consider this:

the Motley Fool stock advisor The analyst team has just defined what they think it is Top 10 stocks Let investors buy it now… and Home Depot wasn't one of them. The 10 stocks that were discounted could deliver huge returns in the coming years.

Stock advisor It provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. the Stock advisor The service has more than tripled the return of the S&P 500 since 2002*.

See 10 stocks

*Stock Advisor returns as of March 25, 2024

Neil Patel Its clients do not have any position in any of the mentioned stocks. The Motley Fool has posts on and recommends Home Depot. The Motley Fool recommends Lowe's Companies. The Motley Fool has Disclosure policy.

1 unstoppable stock that turned $1,000 into $32 million. Should you buy it now? Originally published by The Motley Fool

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