Jim Cramer Says “RH (RH) Is High-Risk, High-Reward”

RH (NYSE:RH) is one of the stocks that Jim Cramer shared his take on. Cramer called it a “wild trader” during the episode, as he commented:

“Initially, stock sold off in after-hours trading, then spiked up 14% before cooling off again. This one’s a wild trader… Ultimately, it finished up 6%. I thought that was pretty darn good because there were a lot of companies that really did not do well after the quarter today. Now, look, not everyone’s sold on the idea that this was a positive quarter. You know, there was a curious one. Analysts at Stifel downgraded RH in response, saying they still believe there’s a fundamental mismatch between the company’s valuation and its long-term prospects.

They just don’t see what kind of catalyst could be coming to help close that mismatch. How about if housing got better? So here’s where I come down: At the end of the day, RH remains what has been a highly levered way to play a potential housing recovery. If we get some more relief on interest rates, meaning if the Fed stays friendly, then housing can rebound, and RH will be a home run over the next couple of years.

If you believe there’ll be a turn in housing, this could be a fantastic stock. But if the housing market doesn’t materially improve, and the company continues to be rocked by tariffs, and Gary Friedman keeps forging boldly with his expansion strategy, even if market conditions don’t really warrant it, well, then some very, very bad, self-inflicted outcomes could be on the table. The bottom line: RH is high-risk, high-reward, but it really comes down to how you feel about housing. Either way, though, I know it’s going to be an entertaining ride.”

Copyright: believeinme33 / 123RF Stock Photo

RH (NYSE:RH) is a retailer and lifestyle brand that provides furniture, lighting, textiles, bathware, decor, and outdoor and children’s furnishings.

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Disclosure: None. This article is originally published at Insider Monkey.