From 3Q19-3Q20, the company's sales grew by 23.2% Y/Y. Now that the pandemic is fading, these tailwinds are fading too and we can already see a slowdown for Home Depot. This caused sales to become inflated and further push the fundamentals higher.

In some cases, Home Depot charged 4x the normal price for some products.

Home Depot compensated for these higher costs by passing them on to its shoppers. The even lower-than-normal supply combined with higher wages were then passed on to buyers, which were stores like Home Depot and Lowe's ( LOW). Lumber mills also had to raise wages due to the higher demand causing an increased workload. A rising worker shortage during the pandemic caused mills to be understaffed and unable to reach the volume needed to fulfill their demand. On top of the large rise in demand, suppliers were also being restricted from issues caused by the pandemic. Lumber mills saw a huge increase in demand that had to be fulfilled, therefore prices were increased to compensate. As stated previously, the demand for lumber increased heavily due to consumers spending more time at home. The reasoning for this is due to changes in both demand and supply. Lumber Prices During the Pandemic (Koyfin) From May 2020-May 2021, the price of lumber increased by over 400%. The rise in lumber prices during the pandemic also allowed Home Depot to increase sales dramatically. This led to more consumers going to Home Depot and buying the necessary supplies to complete their projects, therefore leading to increased sales. Since consumers were spending more time at home, they now had the time and attention to take on more home improvement products. The company added over $40 billion in sales from 2020-2021, which is equal to the growth achieved in the nine years from 2009-2018. Home Depot saw huge growth during the COVID-19 pandemic due to lockdowns causing consumers to spend more time at home. The COVID-19 Pandemic Tailwinds are Fading Because of all of this, and the current share price of the stock, investors may want to reconsider jumping into Home Depot's stock. All of these issues may cause economy to head into a recession, leading to less spending on durable goods.

Furthermore, the developing issues with the housing market will likely also cause trouble for the company's fundamentals. Uncertainties regarding the future of disposable income and a higher savings rate could also cause the company to experience an even worse slowdown. However, the fading pandemic is bringing demand for Home Depot's products with it and this has caused the company's stock to drop over 30% YTD. With consumers being stuck at home and cash-rich from stimulus checks, Home Depot began selling more goods for higher prices. Home Depot ( NYSE: HD) was one of the best winners during the COVID-19 pandemic.

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