Jefferies Recommends These 3 Defensive Stocks Amid Recession and Inflation

2. RH (NYSE:RH)

Number of Hedge Fund Holders: 63

RH (NYSE:RH) operates as a home furnishing retailer. It offers products in various categories, including furniture, lighting, textiles, bath-ware, décor, outdoor & garden, and child & teen furnishings. Jefferies analysts are bullish on RH (NYSE:RH) and cited that the company’s cash balance represents 25% of its market capitalization, which as of July 14 stands at $6.45 billion, and also noted that RH’s (NYSE:RH) profitability is significantly defensive.

On June 30, Jefferies analyst Jonathan Matuszewski trimmed his price target on RH (NYSE:RH) to $400 from $520 but reiterated a Buy rating on the shares. Other analysts are also bullish on RH (NYSE:RH). On July 1, Citi analyst Steven Zaccone noted that RH’s (NYSE:RH) risk/reward ratio offers more upside than downside at the stock’s current valuation while reiterating his Buy rating and $338 price target on the stock.

At the end of Q1 2022, 63 hedge funds held stakes in RH (NYSE:RH) worth $2.84 billion. This is compared to 58 positions in the previous quarter with stakes worth $4.84 billion.

In the first quarter of 2022, Berkshire Hathaway raised its stakes in RH (NYSE:RH) by 20% and brought them to $707.61 million. As of March 31, Berkshire Hathaway owns more than 2.1 million shares of the company and is the largest shareholder.

Here is what Polen Capital had to say about RH (NYSE:RH) in its “Polen US SMID Company Growth Fund” first-quarter 2022 investor letter:

“RH is a furniture store company with brand recognition and a unique business model. The company’s stock price fell sharply over the first three months of 2022 despite solid operating results, which resulted in what we believed to be an attractive opportunity to add to our position in the company. We are mindful that, on the margin, the company is certainly experiencing some early impact from record inflation and rising interest rates, and we feel comfortable in both the management team’s ability to navigate these challenges and the power of the company’s brand and its long-term potential.”