Buffett's Missed Opportunity: Home Depot's 2,370% Return Since 2009
Warren Buffett, the renowned investor, sold his stake in Home Depot in 2009. Since then, the company's stock has soared by approximately 1,570%, and including reinvested dividends, the total return is around 2,370%. Buffett, known for his successful stock picks, might appreciate Home Depot's solid financials and recent industry trends.
Buffett has delegated some stock selection decisions to Todd Combs and Ted Weschler, but his interest in the home improvement sector is evident. Recently, he invested in homebuilders D.R. Horton and Lennar. Home Depot's strong operating margin of 13.1% and return on invested capital (ROIC) of around 31.2% could appeal to Buffett. Additionally, the increasing median age of U.S. homes may drive demand for home improvement products, benefiting Home Depot.
Buffett, a 'business picker' rather than a stock picker, has a proven track record. Home Depot was once part of his portfolio, with Berkshire Hathaway owning shares 20 years ago. If Buffett asked for help in choosing one stock today, I would recommend The Home Depot (HD).
Home Depot's impressive stock performance and solid financials, coupled with recent industry trends and Buffett's past interest, make it an attractive investment. As Buffett continues to expand Berkshire Hathaway's portfolio, an investment in Occidental Petroleum's petrochemical division could also be on the horizon, given his reported interest in the sector.
