May 20, 2022
All the stocks trade below key resistance levels
Consider Home Depot ahead of rivals due to a better outlook
Stocks of home improvement retailers reacted differently as the companies reported mixed quarterly earnings. Home Depot, Inc. (NYSE:HD) reported its earnings first on May 17, which excited investors. The company reported net earnings of $4.2 billion in Q1 2022, higher than $4.1 billion in the previous year.
However, most excitement came from a projected sales and comparable sales guidance of a 3.0% increase in FY22. The projections surpassed estimates of 1.4%, with the estimates reflecting sustained consumer demand.
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Investors turned attention to other home improvement retailers after a promising outlook on Home Depot. Lowe’s Companies, Inc. (NYSE:LOW) quarterly sales disappointed at $23.7 billion. The sales were lower than $24.4 billion in the prior year. The company still affirmed its guidance for FY22 sales of between $97 billion to $99 billion.
Target Corporation (NYSE:TGT) disappointed the markets further. Its net earnings in the quarter came down 51.9% from the previous year. The retailer guided FY22 revenue growth in the low-to mid-single-digit. The stock crashed more than 24% after posting the disappointing results.
Home Depot, Lowe, and Target technical analysis
Source – TradingView
Technically, Home Depot, Lowe, and Target are under pressure. Home Depot rose before coming down again on depressed sentiment in peers. Target’s decline was the biggest after posting the most disappointing results.
We believe that Home Depot can recover sooner owing to its better FY22 outlook. However, it is not yet time to buy the stock. We need to wait for it to clear $300 resistance to get in. Lowe also offers a suitable alternative based on the outlook.
Consider Home Depot ahead of peers. It has posted a minimal drop due to weak sentiment among peers. Home Depot’s outlook is strong, while the earnings came higher. The stock needs to clear the $300 level. Lowe needs to clear $190 to move higher.
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