This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Building a Foundation Like Home Depot Did

Editor's Note: This is a bonus story from Arne Alsin, whose commentary usually appears only on RealMoney . We're offering it today to readers. This column was originally published on RealMoney at 3:29 p.m. EST Monday. To read Alsin's commentary regularly, please click here for information about a free trial to RealMoney.

Someone recently gave me an analyst report on Home Depot (HD - Get Report). The report was superb, laying out the rationale to be long-term bullish on a company that has changed the face of home-improvement retail.

What's interesting is that this strong buy recommendation was written by an Alex Brown analyst way back in 1991. Since then, Home Depot has grown sevenfold, from a $10 billion company to a $70 billion company.

Building for the Long Term

Buying companies like Home Depot early in their growth cycle is rife with advantages for the investor. Forget worrying about the daily quote. If your plan is to hold as long as the story is intact, the short-term quote becomes meaningless.

Whether we're in a bull or bear market in equities also becomes meaningless. You aren't going to enjoy a sevenfold increase in a stock if you attempt to trade around bull and bear market cycles. Worrying about the health of the economy, the level of interest rates and the price of oil are irrelevant if you own a Home Depot-type story early in its life cycle.

And taxes? Uncle Sam can wait. In the case of investors who bought and are still holding Home Depot based on the Alex Brown recommendation back in 1991, they haven't paid a dime in capital gains taxes. All of their original capital plus their unrealized gain is still working for them.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
BBBY $45.37 -0.90%
COST $147.84 -2.42%
HD $134.67 -0.36%
KMX $50.60 -1.35%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs