Insider trading and Home Depot HD

Insider buying (particularly BIG time buying) is just one of several important factors you need to take into account before investing in a company.

What caught my interest today is an SEC registration of an officer of Home Depot who purchased 1.2 MILLION shares ($30 Million worth) at a share price of $25/share March 17, 2008. Now that would be a big bet for almost anybody.

HD's valuations are very attractive i.e. P/E of only 7 and its dividend yield is decent at about 3%. Debt:Equity is a little high at 0.7 and I'd like to see a better current ratio than 1.1.

Definitely worth watching particularly if the share price sinks again. The recent stock price rally in both the USA and Canada will most likely collapse yet again as the underpinnings of this recession continue to unwind over the next 6-18 months. This will provide the best entry point for quality companies like HD or perhaps even more so for its much more rapidly growing competitor Lowes (LOW is just as cheap as HD but has a better balance sheet).

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