Investors liked what they heard from

Home Depot

(HD) - Get Report

Friday.

Shares in the biggest home-improvement retailer jumped 7% after the company forecast strong earnings growth in the face of a broad economic slowdown.

Home Depot predicted earnings would grow 18% to 20% through 2004 on 13% to 15% revenue growth. The company clearly expects to make gains through acquisitions, market-share wins and cost-cutting; Home Depot projects the home-improvement industry will grow at only about 3% annually over the next three years.

The bullish forecast came at Atlanta-based Home Depot's daylong annual investor conference. The announcement was among the retailer's most important in years; some bearish analysts have recently predicted the Atlanta-based company would cut growth forecasts into the midteens percentagewise, from its accustomed 22% to 25%.

As expected, the company also said it was slowing the pace of new store openings, to about 200 a year from previous guidance of 225.

Home Depot also said it expects to earn 28 cents a share in the fourth quarter and $1.27 a share for the year. Both figures match the Wall Street consensus, according to Thomson Financial/First Call.

Lowe's

(LOW) - Get Report

has enjoyed a strong run, up more than 95% on the year. At the same time, Wall Street analysts have

increasingly preferred Lowe's to Home Depot, because of Lowe's stronger growth potential. For example, Home Depot operates more than 1,100 stores in the U.S. and is now beginning to turn to international markets, while Lowe's has about 635 stores and is only beginning to dent large metropolitan markets in California and the mid-Atlantic states.

Still, Friday shows Wall Street's not about to abandon Home Depot.