Home Depot Inc. (NYSE:HD) shares moved up $0.45, or 1.1%, to $41.45 after the company said that it was evaluating alternatives for its HD Supply business. These strategic alternatives include a possible spin off of the division or initial public offering in a move to focus on its core retail business. According to the company, HD Supply is the wholesale distribution business of Home Depot, has nearly 1,000 locations nationwide and in Canada, and employs more than 26,000 people. "We are undertaking this action today because of our desire to increase our focus on our retail business," said the new Chairman and Chief Executive Frank Blake in a statement. "With annual revenues of approximately $12 billion, HD Supply is a healthy, growing and vibrant business, and we are undertaking this evaluation to determine whether there are strategic alternatives with respect to HD Supply that would optimize shareholder value."

Spin offs present excellent opportunities for investors to profit as they typically outperform the overall market by a wide margin during their first year. This is primarily attributable to the fact that spin offs are often companies that benefit from standing alone due to a lack of synergies with their parent company. Moreover, there is occasionally an opportunity to pick up spin off shares at a discount as parent company shareholders occasionally sell their stakes in a spin off immediately after receiving it. Any actions like this would also greatly benefit Home Depot, who would be able to receive a cash influx while unloading some of its debt onto the new entity. Combined, this makes HD a stock worth watching closely!

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