NEW YORK (Reuters) – The Home Depot Inc ( HD.N ) shares have risen with the approach of spring weather, as some investors believe the retailer is well positioned to address the competitive threat of online stave off retailers as the busy season starts for home improvement.
Home Depot shares have risen 0.7 percent since the start of the year earlier this year due in part to the impact of an unusually long and snowy winter on sales, investors and analysts said. In the first three months of 2018, equities fell 6 percent, while the S & P 500 Retailing Index .SPXRT rose 11.3 percent.
Since April 13, the Home Depot share has climbed 10.6 percent ahead of the S & P 500 Retailing Index, which rose 8 percent over the same period. The Amazon.com Inc ( AMZN.O ) stock recorded an increase of 12.1 percent.
Home Depot, the largest US home improvement retailer by revenue, will release its first quarter results on Tuesday.
Homeowners who engage in home improvement projects are more likely to buy supplies online as some investors believe. Home Depot also has a strong deal among contractors, which has helped it surpass the competition from Lowe's Companies Inc ( LOW.N ), whose sales are lagging behind. The results will be published on May 23rd.
Lowe shares gained just 0.5 percent over the past month.
Several other big-box retailers have not done so well. Bed Bath & Beyond Inc. ( BBBY.O ) fell 1.1 percent over the same period after dropping 20 percent on the company's quarterly results on April 12. Target Corp. ( TGT.N ) equities rose 1.9 percent, while Walmart Inc ( WMT.N ) shares fell 1.7 percent.
"It's the time when contractors are starting to engage," said Oliver Pursche, chief market strategist at New York-based Bruderman Asset Management, which owns Home Depot shares. "This is a good omen for Home Depot and similar companies."
Home retailers are also worried that rising US interest rates could slow down real estate growth, said Greg Melich, an analyst at MoffettNathanson in New York. This fear has especially the shares of homeowners such as Lennar Corp. ( LEN.N ) and D.R. Horton Inc. ( DHI.N ).
But the limited supply of homes has pushed home values and encouraged homeowners to spend money on renovation projects. According to Harvard University's Joint Center for Housing Studies, renovation activities are expected to increase by more than 7.2 percent in 2018 over the previous year.
"Homeowners are encouraged by market conditions," said Abbe Will, research associate at the Joint Center for Housing Studies. "They are motivated to do bigger projects: the kitchen, the bathroom."
Home Depot has also taken steps to break online competitors such as Amazon. In December, she announced that she would double her total capital expenditures over three years. A $ 2.5 billion investment is expected, according to the company's fiscal year forecast released in February.
"It has a strategy to compete and win in the multi-channel (retail) sector," Melich said. "Since spring is coming, it should be a pretty good investment."
Report by April Joyner; Arrangement of Alden Bentley and Cynthia Osterman