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Retail Rocket Stocks for the Week

Stocks in this article: HD SKS COST

By Jonas Elmerraji

A new set of economic numbers stand to buoy the markets this week after lackluster performance in stocks over the course of the last five trading days.

A strong proxy for the broad market, the S&P 500 index tumbled nearly 4% during the second trading week in August -- a significant intra-week decline, to say the least.

Company fundamentals have largely improved this earnings season as widening margins improve profitability in spite of flat revenues for many firms. But those economic data points continue to plague the market, giving investors plenty of cause for concern.

This week, Thursday's jobless claims and leading indicators release should help give the market direction to finish the month.

In the mean time, we'll be turning toward the Rocket Stock plays to deliver performance in an otherwise sideways-churning market. For the uninitiated, Rocket Stocks are our weekly list of companies with short-term gain catalysts and longer-term growth potential. In the last 56 weeks, Rocket Stocks have outperformed the S&P 500 by 51.32%.

This week, we'll be focusing on retail stocks set to announce earnings data this week. Here's this week's list.

Despite fallout from the bursting of the housing bubble, retail home improvement firms like Home Depot (HD) finally look like it's in the midst of a recovery.

The company, which operates more than 2,000 stores in the U.S., has seen its shares struggle to keep up with the market since May, when increased volatility became prominent across equities. Still, if Home Depot can provide earnings surprise this week, this stock should finally get a chance to push in to positive territory for the year.

Home Depot has been working hard to re-shape its business in the face of a disastrous few years for the housing market and those who service it. As a result, management has revamped the firm's distribution network, sold off underperforming business segments, and developed more lucrative merchandising strategies to fix its woes. Those changes appear to be paying off as consumers ramp up their do-it-yourself home improvement projects in 2010.

With a long history of returning capital to shareholders, both in the form of share buybacks and a generous 3.46% dividend yield, this stock should continue to be a go-to option for investors who want exposure to a retail space that's in recovery mode. We'll get a better glimpse of Home Depot's recovery Tuesday, when management reports its second-quarter results.

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