Home Depot -- Still Building Value After Strong First-Quarter Results

NEW YORK (TheStreet) -- Don't hold your breath waiting for shares of Home Depot (HD) to get cheap. The world's largest retailer of home-improvement products hasn't been cheap for a long time and it's likely heading higher. Why?

Despite weak recent retail sales data, showing consumers spent less than the market had hoped for in April, consumers didn't neglect home improvement projects -- at least, according to Home Depot's earnings results. And with worst-than-expected results released by rival Lowe's (LOW), it would seem that Home Depot has gained some market share. And all of this bodes well for HD stock.

This means investors who buy HD stock today at around $112, can own shares of a market leader that is trading at just 18 times next year's earnings estimates of $6.02 per share. This implies more than 14% year-over-year earnings growth, assuming the company earnings $5.26 for this fiscal year. This is important because it implies HD is projected to grow earnings next year at almost three percentage-points faster than its long-term projected growth rate of around 12%.

All told, this is the optimal buying opportunity for HD, especially with comparable sales still on the rise. Not only that, but Home Depot continues to show tons of room for higher gross margins, meaning higher profits in the quarters and years ahead. And this is despite the company's annual sales approaching $80 billion, which is roughly 50% higher than rival Lowe's.

If you liked this article you might like

Look Back to Go Forward

You Are Forgetting This Commonsense Investing Wisdom

Cramer: Irma and Harvey Busted the Algos

First Leg Down of United Tech; Hurricanes -- Jim Cramer's Top Thoughts

Cheaper as They Slide; Tax Reform -- Jim Cramer's Top Thoughts