Dear Investor,
This week’s Stock Spotlight is shining on Restoration Hardware (RH)—a stock that has jumped +30% since being added to Hedgeye's Investing Ideas newsletter on October 1, 2024.
Retail Analyst Brian McGough and Hedgeye CEO Keith McCullough believe this stock still has significant upside potential and remains our Retail Team's #1 Best Idea Long.
Our proven “triple-tested” stock-picking process combines fundamental, quantitative, and macro analysis.
Here’s how we identified RH as a high-probability winner:
1) FUNDAMENTALLY APPROVED
RH is the leading luxury home furnishings retailer, transforming its business into a global luxury lifestyle brand. Key drivers include:
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Store Growth: Largest expansion in 10 years, including high-profile international launches in Paris, London, and Milan.
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Product Refresh: First in eight years, projected to accelerate revenue growth.
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Earnings Momentum: EPS projected to hit $25 by 2026 and $43 by 2028.
On the September 20th episode of The Call, Brian McGough emphasized the stock's long-term potential:
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"This could be a $400 stock pretty damn fast. And I would argue that if it turns into a $400 stock, it could be a $500 stock just as fast. So we like this name here. It's currently number one on our best idea long list over a trend [3+ months] and a tail [up to 3 years] duration." |
RH has since surged to $430. Its rapid growth trajectory has solidified its status as one of Hedgeye's top Investing Ideas.
2) SIGNAL APPROVED
In addition to our research team's fundamental analysis, Hedgeye CEO Keith McCullough's quantitative signaling process plays a critical role. When Keith's proprietary signal turns bullish on one of our analysts’ Best Ideas Long, he adds the stock to Investing Ideas.
RH has gained +30% since Investing Ideas subscribers received this high-conviction stock pick on October 1, 2024.
3) MACRO APPROVED
Hedgeye’s macro framework identifies the current USA Quad 2 setup as favorable for RH. Quad 2 is characterized by both growth and inflation accelerating, creating strong tailwinds for businesses tied to discretionary spending and high-end consumer markets.
The Bottom Line:
Hedgeye's triple-tested investment thesis on Restoration Hardware—combining fundamental strength, quantitative momentum, and favorable macro tailwinds—makes this stock a standout investment choice.
With its premium pricing power and market positioning as a leader in the luxury home furnishings space, RH is primed for continued growth.
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Best,
The Hedgeye Team
