Stockchase Opinions

Jim Cramer - Mad Money RH RH-N DON'T BUY Jun 14, 2024

They keep posting disappointing numbers and after the latest, the stock dropped 17% today. Is the CEO a visionary or driving RH to ruin? Pre-2021, RH was a juggernaut as they build luxurious stores including dining around the world at their stores. Also, they're moving into real estates, including spas and hotels. They're spending a fortune to build luxurious experiences. But their core business of luxury furnishings is struggling. They've borrowed money to fund this expansion, however, they spent a big chunk of that money to buyback shares just as interest rates rose and the housing market tightened. Can rates fall fast enough to save RH? Doesn't think so. The outlook is dwindling, but the CEO keeps spending.

$229.730

Stock price when the opinion was issued

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TOP PICK
Not affected by rising rates since the average buyer (wealthy) is not affected by rising rates. Very good time to buy since it has dropped quite a bit. He has just added to it. Should do well going forward. Analysts have 12 buys, 7 holds, 0 sells.
PAST TOP PICK
(A Top Pick Jan 24/22, Down 39%) High-end, and thought they could hide here amidst the luxury consumer. But when the market goes down, everything goes down. High-margin business. Will bounce back on the other side.
BUY
Likes it as it trades at 10x earnings.
DON'T BUY

They report Thursday. Likes them, but they've been issuing disappointing numbers and their accounting issues don't inspire confidence.

BUY

High quality company with excellent management team.
Hit peak revenue during Covid-19 pandemic.
Current share price presenting buying opportunity.
Expecting revenue & margins to grow.
A good long term investment over 5-10 years.


BUY

The market made a mistake in selling it after a downbeat conference call, because RH bought back 17% of shares in just this quarter (23% so far this year). This is one of the biggest single-quarter buybacks he ever heard of. Buybacks shrink EPS, remember, and shows confidence from management

BUY
After its post-earnings surge

Demand was up 10% in July and 12% in August. Sure, you may not want to buy a stock that jumped 25% in one day, but anything related to housing (and falling interest rates) is doing well. He expects a housing boom.

BUY

Has doubled since last June's lows, but weirdly without a fundamental change in its business, like a beat and raise quarter, just some raised guidance. The CEO did buy a lot of shares last June.

RISKY

It reports Wednesday. It's a retail stock, a tough sector. It's fallen with the sector. Wait for the bounce, but in this market it feels like a bet and not an investment.