Home Depot’s Growth Strategy Should Help This ETF | ETF Trends

The pandemic put a strong emphasis on the home as a live-work space for many working professionals. This propped up home improvement stores like Home Depot, which should translate to strength for ETFs that hold the stock, such as the Invesco Dynamic Building & Construction ETF (PKB).

PKB seeks to track the investment results of the Dynamic Building & Construction Intellidex Index. The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying intellidex.

The underlying intellidex is composed of common stocks of U.S. building and construction companies like Home Depot. These companies are engaged primarily in providing construction and related engineering services for building and remodeling residential properties, commercial or industrial buildings, etc.

The fund has seen strong growth over the past few years, rising over 50%. Helping the case for PKB has been a real estate market that’s seeing stratospheric valuations amid high demand but low supply.

Counterbalancing higher home prices is lower interest rates relative to historical numbers. As such, rather than selling into a hot market, property owners who wish to hold on are improving their homes.

PKB Chart

Aggressive Growth Strategy

As of February 23, Home Depot comprises about 4.62% of PKB. With its current allocation, it sits in the fund’s top 10 holdings and could be a strong driver of growth given the home improvement company’s aggressive strategy.

According to a CNBC report, Home Depot is looking beyond the strength that the home improvement space experienced during the pandemic. The company is eyeing $200 billion in annual sales with the help of some nifty branding strategies.

“We’re sort of the 7-Eleven for pros — convenience, value, tremendous product and brands — but what we’re building now is something completely different and revolutionary to get the pro planned purchase,” said Home Depot CEO Ted Decker.

Speaking of growth, that is a prime objective of PKB. Looking at its portfolio allocation, the tilt is towards mid- and small-cap companies with close to 70% using a factor-blended strategy.

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