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Restoration Hardware Holdings Inc (RH) Is Charles Payne’s Top Pick For Long Term Investors

Just recently, Restoration Hardware Holdings Inc (NYSE:RH) got a vote of confidence from Fox Business‘ Charles Payne. He believes that the stock has a significant upside, and is trading at levels which are just perfect for an entry.

Restoration Hardware Holdings Inc (NYSE:RH)

” […] That last spike was after an amazing earnings report and I think the recent pullback has given us the opportunity to get back in there. Fiscal year ’15 numbers are going up. Some people may argue that it is a little bit expensive, but I think it has got a move right now till $95, ultimately north of $100 […],” said Payne.

Restoration Hardware Holdings Inc (NYSE:RH), which is a high end home furnishing retailer might have what one of the panelists called, ‘nose bleed’ P/E ratios, but given the expansion plans of the company, the stock might still be cheap. The stock has a trailing earnings multiple of 54.39, while the forward multiple stands at 28.78.

Payne expressed the opinion that P/E ratios are not necessarily the key to picking up stocks that have a substantial potential to the upside. According to him, Restoration Hardware Holdings Inc (NYSE:RH) is one such company.

On the other hand there are some potential pitfalls that Payne warned against as well. These include the high beta of the stock as compared to the market, and also a significant short position on Restoration Hardware Holdings Inc (NYSE:RH), which could be because of the 40% steep rise in the stock price in late June this year. However, the stock price seems to have stabilised now and the general trend is towards the up since October.

“[…] There is a fairly large short position on it. I am not sure why they don’t like it, but we can get to short squeeze on another good number. So, I think it is a good investment here, not necessarily for trade but certainly for long term investor, and I will caution that it is slightly more volatile than the overall market [..],” said Payne.

Restoration Hardware Holdings Inc (NYSE:RH) is currently trading at $84.95.

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