Home Depot stock rises on slow growth plan

Home Depot CEO Frank Blake may be getting a reverse lesson in business.

In boom times, Wall Street loves fast-growing companies that build dozens of new stores a year.

But in the current economy, Wall Street is rewarding slow growth instead.

On Tuesday, Home Depot stock surged 6.65 percent to $21.48, after an analyst upgraded Home Depot stock to “buy” from “hold,” praising the home improvement chain for its fiscal discipline and for opening only 12 new stores this year. (Rival Lowe’s plans, by contrast, will open 60 to 70 new stores.)

Home Depot’s stock price also responded to reports of an unexpected rise in new housing starts.

Analyst Daniel Binder at Jefferies & Co. Inc., raised his target price on Home Depot shares from $19 to $24. He told clients he expects strong sales in outdoor power equipment this spring, “as more people do landscape maintenance,” as well as a possible recovery in the housing market in the next 12-18 months.