Is The Home Depot (HD) Operating in the Market with a High Entry Barrier?

Parnassus Investments, an investment management firm, released its “Parnassus Value Equity Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund focuses on owning a concentrated portfolio of U.S. large-cap stocks. For the third quarter of 2025, the fund reported a net return of 7.46% outperforming its benchmark, the Russell 1000 Value Index, which returned 5.33% for the same period. During the quarter, the portfolio reduced its weight in the IT sector to increase holdings in the Health Care sector. The fund’s top 5 holdings are also listed in the letter, showing the firm’s main investment positions heading into 2025.

In its third-quarter 2025 investor letter, Parnassus Value Equity Fund highlighted stocks such as The Home Depot, Inc. (NYSE:HD). The Home Depot, Inc. (NYSE:HD) is a home improvement retailer. The one-month return of The Home Depot, Inc. (NYSE:HD) was 3.91%, and its shares lost 9.13% of their value over the last 52 weeks. On December 17, 2025, The Home Depot, Inc. (NYSE:HD) stock closed at $356.75 per share, with a market capitalization of $355.149 billion.

Parnassus Value Equity Fund stated the following regarding The Home Depot, Inc. (NYSE:HD) in its third quarter 2025 investor letter:

"The Home Depot, Inc.'s (NYSE:HD) strong brand equity, scale-driven cost advantages and deep vendor relationships create a formidable barrier to entry in the fragmented home improvement market. The management team’s strategic investments, particularly in the professional customer segment, are expected to further broaden the company’s addressable market, which is already supported by the structural demand for renovation and repair."

The Home Depot, Inc. (NYSE:HD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 104 hedge fund portfolios held The Home Depot, Inc. (NYSE:HD) at the end of the third quarter, which was 93 in the previous quarter. While we acknowledge the potential of The Home Depot, Inc. (NYSE:HD) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered The Home Depot, Inc. (NYSE:HD) and shared the list of stocks Jim Cramer discussed recently. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.