A Wells Fargo analyst recently nudged the company's price target on Home Depot (HD 1.62%) stock lower, from $450 to $445, and maintained an overweight rating on the stock. The new target represents a 13% premium to where the stock is trading as I write this and is a sign that the worst might be over for the housing-improvement market.

A recovery in progress

Recent results from Home Depot and rival Lowe's (NYSE: LOW) gave cause for optimism that growth is returning. Lowe's comparable sales increased by 0.2% in its fourth quarter, and management expects comparable sales to be flat to up 1% for the full year.

Turning back to Home Depot, its comparable sales were up 0.8% in the fourth quarter, with comparable transactions up 0.6% and its comparable average ticket price up 0.2%. In concert with Lowe's, Home Depot's management expects 1% comparable sales growth in 2025.

While these numbers sound anemic, the market is looking for a turning point that could lead to a sustained upturn. The Wells Fargo analyst acknowledges there are headwinds, and the exact time the recovery will kick in is unclear, but Home Depot is a fundamentally strong business. Moreover, the housing recovery will occur at some stage, even if it's largely due to easier comparisons with prior years. 

Is Home Depot a stock to buy?

The "buying the housing recovery" thesis makes sense, but it's hard to think that Home Depot -- a stock that trades at 26 times Wall Street's estimates for 2025 earnings -- is the best way to get exposure to it on a risk-reward basis.

It's a relatively low-risk way to play the idea and a relatively low-reward way. It may suit more conservative investors looking to play the theme. Still, plenty of other housing-related stocks (including many that distribute through Home Depot) are on much lower valuations with significantly more upside if you are bullish on housing. With the timing and strength of the housing recovery still an ongoing debate, it's hard to get too excited about Home Depot.