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watch now VIDEO 0:55 00:55 Jim Cramer talks Home Depot and the power of the business cycle Mad Money with Jim Cramer CNBC's Jim Cramer on Monday suggested that home improvement retailer Home Depot acts as a secular and cyclical stock , able to both grow independently of the business cycle and flourish when the economy is doing well. "Their hybrid model works," he said. "The company's secular characteristics carry it through the cyclical pain, so even if the Fed doesn't move with alacrity to cut rates, Home Depot will still win.
" Lower interest rates tend to improve the housing market, which normally bodes well for housing-related stocks like Home Depot. But Cramer first listed off four "secular trends" that are helping Home Depot succeed in the current economic environment, including a lack of new houses for sale coupled with existing ones that are aging and in need of improvements. A significant crop of Millennial homeowners will shop at Home Depot, he continued, and added that there is a large amount of home equity money in the U.
S. for renovations. The retailer's professional business arm is also able to perform well because of the housing shortage, which is driving up the price of new homes, Cramer said.
But he stressed that the company is set up for lasting success, not just in the current economic landscape. He noted that the stock is up more than one million percent since it debuted on the market in 1981 and said that growth was possible because of the company's duality. "Now you could argue that this is an unusual moment, but historically, it's actually not that unusual for Home Depot," he said.
"There's a boom and bust portion of the business, but for most of that period since 1981, it kept growing regardless." Home Depot did not immediately respond to a request for comment. watch now VIDEO 3:38 03:38 Home Depot is both a cyclical and a growth story, it's been able to ride any cycle, says Jim Cramer Mad Money with Jim Cramer Jim Cramer's Guide to Investing Click here to download Jim Cramer's Guide to Investing at no cost to help you build long-term wealth and invest smarter.
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