Once every so often, a stock comes around that I like so much that I can’t help but share it with my readers.
And I only get this excited about something that has virtually everything we want in a stock, all rolled up into 1.
Here is the stock I’m raving about…
If you were to ask me what I want to see in a stock I was looking to purchase, I’d probably say I need evidence of solid financial data, good relative strength, and some sort of insider buying among other things.
And when I came across Restoration Hardware Holdings, Inc. (RH), it took me a minute to believe I had found all of that in 1 stock on such a high level.
Let’s look at RH piece by piece…
Restoration Hardware Holdings, Inc.
RH, together with its subsidiaries, is engaged in the retail of home furnishings. Its product categories include furniture, lighting, textiles, bathware, décor, outdoor and garden, tableware, and children’s furnishings.
This services sector company resides in the home furnishing stores industry with 2,600 full-time employees.
Financials
As far as the income statement goes, RH looks fantastic.
When I go to look at the financials of any company, the first thing I focus on is the gross annual profit data. And for RH, that data has been consistently rising since the beginning of 2012.
Those significant gains from year to year indicate strong growth, and strong growth usually makes for a great stock.
Strength
The relative strength can be perceived a few different ways, but as a whole, RH is clearly a strong stock.
First of all, the relative strength index, which measures the current strength, has RH around the 68-mark. Anything above 50 is considered strong with the 70-mark signifying very high relative strength.
The other reason I see RH as a strong stock is that the recent market fall in early October didn’t take RH below its long-term moving average. That’s a sign of a resilient stock with upside.
Insider Buying
This is an important hint that a stock is in great shape.
The insiders have the privileged information about the present and future outlooks for the company, and when they sink millions of dollars into stock of that company, we can assume that the outlook is good.
And when a RH director purchased a few million dollars-worth of shares in his company, my insider purchase box was emphatically checked.
At its current price near $85, RH is a stock I would recommend as a buy.
Now, this was a sort of preview to what I do for readers of my Penny Stock Insider monthly newsletter. So, if you’d like to receive more recommendations like RH, check your email for an invitation for PSI.
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