After yesterday’s bad earnings news from Home Depot (HD), I decided to check out potential price targets for this retailer using my Monte Carlo Simulation.

First off, I used to be a shareholder of HD but sold it because it was going nowhere for a long time, but now it looks like a tempting buy. I say that for two reasons: one, the stock has been down since the new CEO came to town and two, I expect to be at HD every weekend, starting in Spring, spending my money buying supplies for my two houses.

Based on my Monte Carlo sim, there’s a strong probability that we’ve bottomed and the low around 25 probably won’t be broken. From yesterday’s close, the short term downside price targets are: $26, with the worst case (and a break of $25) being $22. Short term upside price targets are: $30, then $34, then $38, and then $42.

Remember, these targets can be tossed out the window in a moments notice due to extreme volatility in the markets.� Monte Carlo sims are great, and I love them, but a standard distribution doesn’t hold up well when the markets are panicking!

The market is presenting us with lots of “selective” buying opportunities right now and I’m busying finding them for my 401k portfolio. My recent buy in EMCOR (EME) is working out really well and I’m looking to add HD to my portfolio. I just have to wait for my 401k trading account to open!

Disclosure: No positions in HD, long EME