1 Stock That Turned $1,000 Into Almost $30 Million

Investing is done well when viewed as a long-term play. Moreover, instead of looking at stocks as if they were lines on a screen, investors need to realize that they represent real businesses.

In recent decades, very few companies have performed better for investors than this one. Since they initial public offering in September 1981, the stock generated a total return of 2,926,000%, turning a $1,000 investment into nearly $30 million today (as of August 6).

Read on to learn more about this business and whether or not it represents a smart investment opportunity today.

Dominating the retail sector

Company investors need to learn about is Home Depot (HD 0.09%)whose compound capitalization track record is very impressive. The company sells various tools and supplies to both DIY and professional customers through its massive warehouse-style stores. This pattern hasn’t changed much, if at all, over the decades.

In fiscal year 1993, Home Depot generated net sales of $9.2 billion. And it operated 264 stores across the country. But the company’s early executive team realized that all they had to do was replicate what was working at existing stores in multiple locations around the country. By launching an aggressive expansion campaign, Home Depot has grown its store base nearly ninefold since 1993 to 2,337 today (at the end of Q1 2024 on April 28).

More stores and higher revenue have, unsurprisingly, led to increased earnings over time. Home Depot’s consistent profits allow the management team to return plenty of capital to investors. The company has paid a steadily increasing dividend since 1987, paying out $16.2 billion that way in fiscal 2022 and 2023 combined. Directors also lean on share buybacksamounting to US$14.6 billion in the last two full fiscal years.

These days, Home Depot has come to dominate the home improvement industry. It is much larger than its smaller rival, Lowe’s. And because of its relationship with professional contractors, Home Depot typically sees a better operating margin and higher return on invested capital. This indicates its superiority.

Is it too late to buy Home Depot stock?

With a market capitalization of more than $350 billion, Home Depot is one of the most valuable companies in the world. So you might be wondering if it’s too late to buy the stock. I don’t necessarily think it is.

Yes, the company is not on a solid footing today. Inflationary pressures are discouraging households from spending on big purchases, an area that saw strong growth during the height of the pandemic. That’s why Home Depot’s same-store sales are expected to fall 1 percent in the current fiscal year. Perhaps lower interest rates and a better housing market could provide a much-needed jolt.

Home Depot still has a long way to go to capture more market share. It is by far the biggest player in the industry. But with an estimated $1 trillion in annual sales volume in the home improvement market, it shouldn’t be a problem to achieve long-term sustainable growth over multiple business cycles.

Add in the continued shortage of U.S. housing stock, along with the rising average age of homes, and the ingredients are there for solid demand for home improvements. Home Depot is in strong financial shape to weather any negative effects the economy may bring.

While there’s no question that Home Depot’s future returns won’t come close to the past, investors looking for a safe and stable business to add to their portfolios should take a closer look at the stock.