Home Depot Share Price Rises to Record High Too Late to Buy?

Summary:
• Home Depot share price crossed the $430 mark on Monday, and has gained more than 24 percent year-to-date. Is there more room for growth?

Home Depot share price rose to record levels of $430.25 on Monday, continuing its newfound momentum that somehow defies its soft earnings released a week ago. However, the stock declined slightly to close the day at $428.67, a gain of 2 percent from the previous session.

Why the HD is likely to stay on the growth path

The home improvement retailer reported $40.2 billion in sales, which was speckled with a 1.3 percent drop in comparable sales. However, it has a glossy outlook, with a target to maintain a gross margin of 33.5 percent. Impressively, it has maintained its dividend payment for 38 consecutive years, and it is scheduled to issue $2.25 to its shareholders on Wednesday.

Home Depot share price is up by 6 percent in the last month, and has gained 24 percent year-to-date, underlining a strong bullish momentum. In addition, with successive earnings forecast beats, the company has a healthy bottom line that offers a good buffer against market shocks.

Institutional investors have recently raised their holdings in Home Depot (NYSE: HD), signaling an upbeat sentiment around its growth prospects. Fisher Asset Management increased its ownership by 2.2 percent, while FMR LLC raised its stake by 10.1 percent in the third quarter. Institutional investors currently own 70.3 percent of the company.

Analysts have recently raised their 12-month targets for Home Depot share price. Truist Securities raised its price target from $459 to $465 and maintained a “buy” rating on the stock following the Q3 earnings call. This target implies a 6.5 percent headroom from the current price.

On the other hand, investment Banking Company Stifel has a comparatively lower target of $405, raised from an earlier target of $400, and maintained a “hold” rating. The current share price is above that mark by 5.8 percent.

Home Depot share price forecast

Home Depot share price pivots at $427, and the momentum signals a likely continuation of the upside. That will likely see the sock move to $429 where it will encounter the first resistance. However, extended control by the buyers will break above that level and could drive the price higher to test $430.

On the downside, moving below $427 will favour the sellers to be in control. In that case, the first support is likely to be established at $426. A break below that mark will invalidate the upside narrative. That momentum could also take the price lower to test $424.