Sometimes you can take clues and build them into something that adds up to a potentially good stock pick. This morning, Tractor Supply (TSCO) reports a number that's almost double what people are looking for. You browse the aisles for Tractor Supply, you see a lot of merchandise related to building and home improvement.
Earlier this week, we got a number from Titan Machinery (TITN), a distributor of Case New Holland farm and construction equipment. It was stellar, so stellar that the company had to let people know ahead of time, just like Tractor Supply.
And then there's Sherwin-Williams (SHW). Business is up 20%, just a fantastic number, once again precipitating the need for a press release, because the analysts were looking for a number materially lower than what most other people were looking for.
These remarkable preannouncements at a time when employment is weak and small businesses are getting less optimistic tell me that you can separate, for now, employment growth from earnings.
Which brings me to the idea of buying Home Depot (HD). Yep, Home Depot. Even up here. The goods it sells are very complementary to what Tractor Supply and Titan sell. If paint is booming at Sherwin-Williams, and we know the paint is being bought for both interiors and exteriors, then the home-improvement aisles must be booming, too.
If you go back to the last few Home Depot conference calls, you will hear that the company has been beating the numbers without housing tailwinds. Tractor Supply, Titan and Sherwin Williams tell me that the tailwinds might be in place. That augurs so well for Home Depot that I believe it is worth buying, even after this terrific run. The growth is back, and Home Depot could be heading nicely higher.