Give home improvement stock Home Depot (HD) credit; it saw a problem and it moved to fix it. Sadly, that problem involved nine dead children thanks to a line of above-ground pools sold at Home Depot. But Home Depot has moved to recall the pools, and that was a welcome development to shareholders. Shareholders indicated as much by buying in, and sending Home Depot shares up fractionally in Tuesday afternoon’s trading.
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The recall focuses on three different lines of above-ground pools, noted a report in Newsweek: Bestway, Intex, and Polygroup. These pools have been involved in the drowning deaths of nine children, the report noted, and that may be a risk too far for most parents to stomach.
It may sound odd to call an above-ground pool a “drowning risk,” because literally every pool is a drowning risk in one way or another. But, the report noted, the Bestway, Intex and Polygroup pools are a different matter. These pools have “compression straps” that are around the sides of the pool, and younger children can use these as a foothold to climb up and gain access to the pool itself. This puts the tykes at a particularly high risk of drowning as they can gain access to the pool without adult supervision. Since the deaths are related to children between 22 months and three years old, it becomes clear why the recall notices went out.
Mexican Distribution Center Closed. No, Not That Mexico
Meanwhile, Home Depot is also reportedly leaning up its supply chain a bit, with plans to shutter a distribution center in Mexico. Interestingly, it is not the Mexico you may be thinking of. The distribution center is in Mexico, Missouri.
A reason for closing the distribution center was not given, but Home Depot noted it was “…focused on doing the right thing and supporting our associates with separation packages, transitional benefits and job placement support. Impacted associates have been encouraged to apply to other roles within the company.” Given that the closure is set to impact 61 employees, it is a safe bet that many of them will be able to find new roles within Home Depot.
Is Home Depot a Good Long-Term Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on HD stock based on 17 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 1.23% rally in its share price over the past year, the average HD price target of $428.12 per share implies 16.95% upside potential.
