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Restoration Hardware Builds A Beautiful Chart

Restoration Hardware, $RH, has been on my watchlist for quite some time. The stock first came across my radar on June 10, as it gapped up over 15% on massive volume. That type of move is not "Aunt Suzzy" buying and is clearly a sign a large fund or institution is coming in to purchase the stock. Unless you have been living under a rock for the past seven months, you undoubtedly know that the real estate market has been on fire. I was speaking to someone in my neighborhood yesterday afternoon, and we both just couldn't believe the prices the houses in my area are selling for. This demand for housing fits perfectly with RH which sells hardware, bathroom fixtures, furniture, and lighting for those looking to redesign their homes.

While researching Restoration Hardware, a few other things caught my eye. First, management currently owns over 25% of its' shares, indicating they too are bullish on their company's future. In addition, Restoration Hardware produced a return on equity over 150% last year, demonstrating how effective they are at managing their money. Moreover, they generated strong earnings and sales growth last quarter and are projected to have a successful 2022 as well.

Going back to its' chart, RH has been consolidating in a very quiet and orderly fashion after its' fantastic move in June. This is exactly what I like to see as it indicates distribution is not coming into the market. Restoration Hardware looks to be forming a beautiful cup and handle pattern, and I'll be sure to watch this leading stock in the coming weeks for an opportunity to open a position.

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  • bases

  • bullish