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Look for Home Depot to Hammer Estimates


The upgrade by Morgan Stanley could have a big impact.

Is it summer yet? I don't want to see another snow shovel for as long as I live.

Asian stocks sank overnight. The Hang Seng and the Nikkei were off 0.58% and 1.05%, respectively. European stocks however, were in positive territory early this morning. And here in the US, we're currently trading lower.

Here's what I'm focused on this fine Monday morning:

Home Depot (HD):
Morgan Stanley inched up its rating to Overweight, and I wanted to weigh in.

1. While I'm not too crazy about those orange aprons or the knack its employees have for hiding when you need them, I'm warming to the overall story.

2. The company continues to have very competitive prices and remains a one-stop shop for many projects. And no matter how you slice it, its going to benefit as construction ramps up. Frankly, I think the upgrade could have a big impact, and that we could see this stock at a new 52-week high in fairly short order. Look for the company to continue to really hammer estimates.

By the way, I'm not biased -- I'm also smitten with Lowe's (LOW).

Motorola (MOT):
Barron's had some nice things to say about the Illinois-based company. The eye-catcher is that the paper, as sum of all the parts, thinks Motorola is worth "at least" $9 a pop.

My thoughts:

1. If Motorola were broken apart, it would be worth a lot more than its shares trade for in the open market. But then again, to a certain degree, that's true for a number of other publicly traded companies. Long story short, the Barron's article doesn't convince me that I need to be bottom-fishing the stock.

2. Motorola's stock has plenty of upside potential over the long haul. But its near-term earnings prospects leave a bit to be desired. I'd like to see a few more quarters of better-than-expected performance.

3. Some sizable open-market insider buying in 2010 might help me warm to the story a little more, too.

Amazon (AMZN):
Justin Sharon points out in Upgrades & Downgrades: Is Amazon a Money Tree? that Collins Stewart bumped up its rating on the book behemoth to Buy.

My read on the situation:

1. In late December, I said in With Sales Story Over, Will Amazon Have Happy Ending? that some of the air may come out of this balloon. It turns out I was right. A quick look at a chart will reveal obvious headwinds Bezos and crew have faced.

2. I'm starting to get a little more excited, though, because of the sell-off and what I see as a potential opportunity. Remember that the company has been whooping estimates, and going forward I expect that to continue.

3. Also, as I pointed out in my December missive, institutions looking to put money to work are likely to continue to be drawn to this big name because of its reputation, solid management, and the recent earnings beats.

I certainly can't guarantee we aren't going any lower, but I feel much more upbeat with the stock at $117 and change than I did at $139 and change

Disney (DIS):
JPMorgan apparently goosed its rating to Neutral.

I've been, and continue to be a big fan of Disney. Not only do I expect its theme parks to get more play here in 2010, but I think merchandise sales should show a pulse with the economy improving. And an improving ad environment could help its broadcasting business in a big way. Admittedly the stock isn't a crazy bargain at 15.4 times this year's estimate, but I do think it could have some legs nonetheless (see Six Reasons Disney Could Be a Fun Ride).

Have a great day!
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No positions in stocks mentioned.

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