In his No-Huddle Offense segment of Mad Money Wednesday, Jim Cramer took a quick look back at the first half of the year to see which company delivered the most stunning upside surprise. That company was RH (RH) , which saw 78% revenue growth that no one saw coming.
How did RH see the strongest demand trends in the industry? Simple. The company has Gary Friedman at the helm.
Cramer explained that RH doesn't have fashion risk or seasonal risk and investors don't need to worry about promotions crimping gross margins. RH is truly a lifestyle brand, one with palaces for showrooms and a wealthy clientele. With a continuing strong housing market, high stock prices and pent up demand from the pandemic, Cramer said RH will be the stock to own for the second half of the year as well.
Let's check on the charts of RH. In our last review on March 26 we wrote that "Whenever I look at a chart I first try to decide where to risk. At what price point will the chart in my opinion look weak or bearish. Looking at RH today I would suggest a $450 sell stop. I would also suggest buying RH on strength rather than weakness."
In this updated daily bar chart of RH, below, we can see that prices have traded higher from late March. RH is trading above the rising 50-day moving average line and the rising 200-day moving average line.
The On-Balance-Volume (OBV) line has firmed from late March. The daily Moving Average Convergence Divergence (MACD) oscillator is above the zero line and rising.
In this weekly Japanese candlestick chart of RH, below, we can see a positive picture. Prices are in an uptrend and trade above the rising 40-week moving average line. The weekly OBV line is bullish and so is the MACD oscillator.
In this daily Point and Figure chart of RH, below, we can see an upside price target in the $915 area.
In this weekly Point and Figure chart of RH, below, we can see a price target in the $1,020 area.
Bottom line strategy: Continue to hold longs on RH. Raise stop protection to $590 from $450. The $915 area and then the $1,020 area our price targets.