“Drive the Economy”: Home Depot Stock (NYSE:HD) Slides as Former CEO Backs Trump Energy Plan

We know that home improvement giant Home Depot HD -2.10% ▼ depends heavily on the nature of the economy as a whole. Without a solid economy and disposable income all but the most basic and vital of home maintenance tasks are out of the picture. That takes Home Depot’s earnings with them. And Bob Nardelli, former CEO of Home Depot, recently had kind words about President Trump’s energy plan. This did not sit well with investors, though, who sent shares sliding nearly 2% in Wednesday morning’s trading.

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Basically, Nardelli asserted that the Trump plan would “drive the economy,” mostly by making energy prices cheaper by pushing harder for domestic supply. If energy prices decline, a lot of money that was tied up in some of the most basic purchases can be routed elsewhere. Plus, declining energy prices have knock-on effects as well, which will hopefully lower prices elsewhere and open up further money.

Nardelli also had kind words about Trump’s efforts to remove Iran as a threat from the Strait of Hormuz. Nardelli noted that Trump is a “master chess player,” constantly two or three moves ahead. Nardelli also pointed out that gas prices are up right now, but they are not up as much as they were under the “previous administration.”

Building Tomorrow’s Pros

We also know that Home Depot has a vested interest in building the next generation of professionals, especially given how much of Home Depot’s business now comes from the pro sector. The pro sector has helped ameliorate a lot of losses from the regular do-it-yourselfer market. Thus, Home Depot is helping to set up tomorrow’s pros today with the Path to Pro Education Grants system.

The Path to Pro Education Grants system looks to help bring back shop classes, helping to spark interest in youth in trade education. With reports suggesting that 41% of current construction workers are on track to retire by 2031, that will leave a gaping hole in the market, one that is not being filled by the next generation. The grants system offers up as much as $10,000 to K-12 schools and other organizations to build and augment skilled trades programs.

Is Home Depot a Good Long-Term Buy?

Turning to Wall Street, analysts have a Strong Buy consensus rating on HD stock based on 17 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 2.08% loss in its share price over the past year, the average HD price target of $422.47 per share implies 20.51% upside potential.

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