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Globe and Mail
10 hours ago
- Business
- Globe and Mail
2 Top Stocks to Buy Now at Big Discounts and Hold for Years
Sometimes Wall Street can be very slow to understand the real value of a business. The competitive advantage and growth strategy of a company can be misunderstood, leading to depressed valuations and underperforming share prices. Investors who can see through the stock volatility and focus on the key signals that set a company up for long-term success can be rewarded with outsize gains over time. Here are two stocks of market-leading brands that are trading well off their previous highs and could be significantly undervalued. 1. RH RH (NYSE: RH), the company formerly known as Restoration Hardware, emerged as a prominent luxury furniture brand over the past decade. In the past year, however, the business struggled with several macroeconomic headwinds, such as a weak housing market and uncertainties over tariffs. Questions about near-term demand have sent the stock down 52% this year, but this is a great buying opportunity for a long-term investor. RH's trailing-12-month revenue of $3.3 billion is below its previous peak of $3.9 billion a few years ago, but it just reported a strong first quarter. Revenue grew 12% year over year in the quarter, outperforming the rest of the industry. RH is expanding its addressable market to hospitality offerings in its design galleries, such as restaurants and wine bars, which has elevated the shopping experience to something that cannot be replicated by e-commerce competitors. Moreover, the company entered the $200 billion North American hotel industry with RH Guesthouses, and it offers much more, including private jets and luxury yachts for charter in the Caribbean and Mediterranean. All this creates an ecosystem of services meant to showcase the RH lifestyle and raise the brand to something more than just furniture products. It's for these reasons that RH has a history of reporting much higher margins than the average furniture store. Its adjusted operating margin was 7% in the first quarter, below its previous 10-year average of 12%. It should return to those higher margins in a strong housing market, and this is not reflected in the stock's valuation. Over the last 10 years, the stock traded at a price-to-sales multiple ranging from 0.48 to 6.59. The average was just over 2 times sales, with the stock currently trading at a multiple of 1.16. Investors who buy shares at these lower discounted prices and hold until the housing market is fully recovered should be well rewarded. 2. Roku Roku (NASDAQ: ROKU) is another beaten-down stock whose long-term prospects are not fully reflected by its current share price. The stock is trading about 32% below where it was five years ago, but the platform continues to show double-digit growth in revenue that sets up a potential bull run. Roku is a leading connected-TV streaming platform that is benefiting from a growing digital advertising market, which is how the company generates most of its revenue. It also gets a small percentage of revenue from selling its streaming devices, but that is a low-margin business. Advertising can be cyclical with the broader economy, and that's what caused the stock to collapse a few years ago. But Wall Street is missing the real value of the company's platform. It is fundamentally a TV operating system that has achieved tremendous viewership in the U.S. through its affordable Roku TVs and streaming devices. The company reaches half of U.S. broadband households. This large viewership led to 35.8 billion total streaming hours on its platform in the first quarter, representing a year-over-year increase of 16%. This opens up a lot of opportunities for growth over the long term, as evidenced by a recent deal with Amazon. Roku just announced an integration with Amazon Ads, which could have a significant impact on Roku's advertising revenue. This partnership will allow advertisers to access 80% of U.S. connected TV households through Amazon's demand-side platform, sending more business to Roku. The streamer's revenue grew 16% year over year in the first quarter, indicating more advertising by big brands that want exposure to its large user base. This reach provides tremendous negotiating power with content providers, retail brands, and other media companies that would like access to Roku's audience. The stock is priced at a 2.74 price-to-sales multiple, which is at the low end of its past trading range. As Roku continues attract more advertising investment, investors who patiently hold the stock will be rewarded. Should you invest $1,000 in RH right now? Before you buy stock in RH, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and RH wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $891,722!* Now, it's worth noting Stock Advisor 's total average return is995% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Roku. The Motley Fool recommends RH. The Motley Fool has a disclosure policy.
Yahoo
14-06-2025
- Business
- Yahoo
RH (RH) Bullish Outlook, Impressive Earnings Spark 7% Rally
We recently published a list of . In this article, we are going to take a look at where RH (NYSE:RH) stands against other best-performing stocks of Friday. RH snapped a two-day losing streak on Friday, adding 6.93 percent to close at $189.12 apiece as investors cheered its bullish outlook and impressive earnings performance during the past quarter. In its financial statement, RH (NYSE:RH) said that it swung to a net income of $8.039 million in the first quarter ending May 2025, from a $3.625 million net loss in the same period last year. Net revenues grew by 12 percent to $813.95 million from $726.96 million year-on-year. A customer happily browsing aisles of high-end furniture in a large showroom. Given the promising results, RH (NYSE:RH) said that it was maintaining its current guidance for fiscal 2025, 'assuming the existing tariffs remain unchanged.' RH (NYSE:RH) expects revenues to grow by 10 to 13 percent for the full fiscal year of 2025, and between 8 and 10 percent for the second quarter alone. Formerly Restoration Hardware, RH (NYSE:RH) is engaged in luxury furniture retailing. It sources a significant chunk of its products from overseas, including China and other Asian countries. While we acknowledge the potential of RH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
14-06-2025
- Business
- Yahoo
RH (RH) Bullish Outlook, Impressive Earnings Spark 7% Rally
We recently published a list of . In this article, we are going to take a look at where RH (NYSE:RH) stands against other best-performing stocks of Friday. RH snapped a two-day losing streak on Friday, adding 6.93 percent to close at $189.12 apiece as investors cheered its bullish outlook and impressive earnings performance during the past quarter. In its financial statement, RH (NYSE:RH) said that it swung to a net income of $8.039 million in the first quarter ending May 2025, from a $3.625 million net loss in the same period last year. Net revenues grew by 12 percent to $813.95 million from $726.96 million year-on-year. A customer happily browsing aisles of high-end furniture in a large showroom. Given the promising results, RH (NYSE:RH) said that it was maintaining its current guidance for fiscal 2025, 'assuming the existing tariffs remain unchanged.' RH (NYSE:RH) expects revenues to grow by 10 to 13 percent for the full fiscal year of 2025, and between 8 and 10 percent for the second quarter alone. Formerly Restoration Hardware, RH (NYSE:RH) is engaged in luxury furniture retailing. It sources a significant chunk of its products from overseas, including China and other Asian countries. While we acknowledge the potential of RH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-06-2025
- Business
- Yahoo
RH Continues to Mitigate Tariff Pressure; Says Revenues Will Take Short-term Hit in Q2
MILAN — RH shares are still recovering from the 'Liberation Day' duties announced by President Donald Trump on April 2. Since then, the firm has shifted sourcing out of China and rerouted a significant portion of its upholstered furniture to its own North Carolina factory, RH chief executive officer Gary Friedman said Thursday, as the company released its first-quarter results. The Corte Madera, Calif.-based RH firm formerly known as Restoration Hardware posted a net profit of $8.04 million, or 43 cents a share in the three month fiscal period ended May 3. That compares to a loss of $3.63 million or 20 cents a share in the same period a year earlier. Shares rallied 19 percent in late trade on the news. In April, President Trump's trade policy announcement drove RH's shares to their lowest level in almost five years. More from WWD Vietnam's Ready For High Stakes US Trade Talks To Avoid Steep Tariffs Fritz Hansen's New Creative Director Ushers in Modern Era, Welcomes Michael Anastassiades to Lineup What a 55 Percent Tariff on Chinese Goods Could Mean for Footwear Firms Revenues fell slightly short of analyst expectations, as well as the revenue target RH issued in April. Sales rose 12 percent to $814 million in the fiscal three-month period ended May 3. This compares to RH's guidance of a 12.5 percent to 13.5 percent rise. A Factset poll of analysts forecasted sales of $818.6 million. In the same period, RH posted an operating margin of 6.9 percent and adjusted earnings before interest, taxes, depreciation and amortization or EBITDA margin of 13.1 percent. 'While there remains uncertainty until the reciprocal tariff negotiations are complete, we have proven we are well positioned to compete favorably in any market conditions,' Friedman continued, adding that the firm sees disruption negatively impacting its revenues by approximately 6 points in the second quarter and will recover in the second half. Friedman said the company is sticking to its full-year fiscal guidance. Offsetting Market Headwinds Despite a challenging housing market, the worst in 50 years, RH forecasted revenue growth of 10 to 13 percent in fiscal 2025, an adjusted operating margin of 14 to 15 percent and an adjusted EBITDA margin of 20 to 21 percent. Friedman also said the company is working on a long-term sourcing strategy to diversify production. In fiscal 2024, the company sought to offset macro headwinds by investing $2.2 billion into stock repurchases and expanding its portfolio with real estate assets totaling an estimated equity value of approximately $500 million. 'We plan to monetize opportunistically as market conditions warrant,' he said. With regard to excess inventory worth $200 to $300 million, the company plans to turn it into cash over the next 12 to 18 months. Taking Market Share, Amid Downturn During the first-quarter earnings conference call, Friedman was enthusiastic about upcoming openings in London, Milan and Paris. RH Paris will open in September, during the Maison&Objet trade show. Located on Champs Élysées, it will be RH's most 'elegant and inspiring Gallery yet.' RH has built a freestanding RH Interior Design Studio and will open Le Jardin RH restaurant that will serve up American classics. Its rooftop is privy to views of the Eiffel Tower and Grand Palais. London and Milan will open in 2026. The Galleries are a winning concept, he added, and European revenues continue to rise. RH England, The Gallery at Aynho Park — a 73-acre, 17th-century estate opened in 2023, is testament to that success, he said, noting that it generated $46 million in total demand in its second full year. This bodes well for all new Galleries, including the upcoming London Gallery in Mayfair. 'If an RH Gallery in the English countryside, with an estimated population of 100,000 in a 10-mile radius two hours outside of London, can generate $46 million… what can an RH Gallery in the center of Mayfair, the most exclusive shopping district in London with a population of 9.7 million, do in its second full fiscal year?' RH's expansion strategy is focused on taking market share despite macro headwinds. Moving forward, RH will opening seven to nine new Galleries per year. On Thursday, China affirmed a trade deal announced by President Trump, marking a truce between the world's two largest economies. The U.S. will impose 55 percent duties on Chinese goods, while China will impose 10 percent tariffs on all U.S. goods. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
13-06-2025
- Business
- Forbes
Q1 Profit Can't Justify RH's $180 Price Tag
GRAYS, ENGLAND - FEBRUARY 5: A general view of an RH Outlet furniture retail store at Lakeside ... More Retail Park on February 5, 2024 in Grays, United Kingdom. (Photo by) Note: RH FY'24 ended on February 1, 2025 RH stock, the luxury home furnishings retailer formerly known as Restoration Hardware, surged over 15% in after-hours trading on Thursday after the company reaffirmed its full-year forecast and discussed strategies to address rising tariffs. RH anticipates revenue growth of 10% to 13% for FY 2025, demonstrating resilience in the face of macroeconomic challenges. Yet, the excitement quickly subsided—shares fell 1.18% in after-hours trading to $178.84 following a mixed Q1 earnings report that exceeded EPS expectations but fell short on sales forecasts. For investors looking for growth paired with lower volatility, the Trefis High Quality Portfolio has outperformed the S&P 500, delivering 91% returns since its inception, providing a steadier experience during turbulent times. RH generates revenue through a combination of high-touch showrooms and lavishly curated catalogs, available both in print and online. Its product offerings include furniture, lighting, textiles, bathware, garden products, and even teen furnishings—aimed at affluent consumers with a focus on design-forward aesthetics and premium prices. The company reported a net income of $8.04 million ($0.40 per share) for Q1, reversing a loss of $3.63 million ($0.20 per share) from the previous year. Revenue increased 12% year-over-year to $814 million, coming just short of analyst expectations. Adjusted operating margin hit 7%, with EBITDA margin at 13.1%. Nevertheless, RH contends with significant obstacles: a sluggish housing market—characterized by CEO Gary Friedman as the 'toughest in almost 50 years'—and escalating tariff pressures threaten future earnings. The company detailed aggressive supply chain changes: RH is shifting production away from China, with imports from the country expected to decrease from 16% in Q1 to just 2% by Q4. The company aims to produce 52% of its upholstered goods domestically in the U.S. and 21% in Italy by year-end. However, these adjustments come with costs—tariffs are anticipated to impact Q2 revenue by approximately six percentage points. RH has also postponed the introduction of a new concept to spring 2026 amid tariff uncertainties. Despite these challenges, it is advancing with global expansion plans, with a flagship store set to open on Paris' Champs Élysées in September. The company intends to launch 7–9 new galleries each year, focusing on major cities such as London and Milan. Investors should be wary of RH's historical performance during downturns. The stock fell 71% during the 2022 inflation shock—nearly three times the S&P 500's 25% drop—and 68% during the 2020 pandemic crash. While it bounced back quickly post-COVID, it has yet to regain its 2021 highs. RH's heightened sensitivity to macroeconomic shocks raises questions about its sustainability during a potential recession. Our dashboard How Low Can Stocks Go During A Market Crash captures the performance of key stocks during and after the last six market crashes. With a valuation of approximately 45× forward earnings, RH trades at a significant premium compared to both its five-year average (38×) and the S&P 500 (26×). Its price-to-free-cash-flow ratio is particularly concerning (>200x, versus 21x for the S&P index), indicating that investor expectations may be outpacing the underlying fundamentals. Following a post-pandemic demand boom in FY 2020, RH experienced a turbulent stretch from FY 2021 through FY 2023 as rising mortgage rates, inflation, and declining housing markets pressured results. FY 2024 provided a degree of recovery, however, investor confidence remains fragile. Tariffs and the weak housing market continue to impact the outlook, despite operational enhancements. RH is undertaking a significant shift—restructuring its supply chain, expanding globally, and enhancing margins. However, the stock remains volatile and highly valued, with a history of significant declines during challenging times. Trefis partners with Empirical Asset Management—a wealth management firm in the Boston area—whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has integrated the Trefis HQ Portfolio into its asset allocation framework to deliver better returns and reduced risk for clients compared to the benchmark index—a smoother experience as evidenced in HQ Portfolio performance metrics.
