5 Best Mid-Cap Stocks To Buy Now

4. RH (NYSE:RH)

Number of Hedge Fund Holders: 48

Market Cap as of February 6: $7.925 billion 

RH (NYSE:RH) is a California-based home furnishings retailer that provides a diverse range of products that fall into categories like furniture, lighting, textiles, bathware, home decor, and outdoor and garden items. In Q3, the business generated $102 million in adjusted free cash flow, ending the quarter with $2.15 billion in cash, total net debt of $375 million, and a trailing twelve months adjusted EBITDA of $1.0 billion. RH (NYSE:RH) is one of the best mid-cap stocks to invest in. 

On January 4, Guggenheim analyst Steven Forbes wrote in a research note that RH (NYSE:RH) reported in a SEC filing that it had 23,064,215 shares of common stock outstanding as of January 3. This led the analyst to conclude that RH (NYSE:RH) had repurchased 1,545,321 shares between December 15, 2022 and January 3, which he estimates to be worth approximately $400 million based on the average trading price during that period. The analyst is “slightly raising” his earnings per share estimates accordingly and continues to have a Buy rating on RH (NYSE:RH) shares with a price target of $350.

According to Insider Monkey’s data, 48 hedge funds were long RH (NYSE:RH) at the end of the third quarter of 2022, compared to 59 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 2.36 million shares worth $580.7 million.  

Polen Capital made the following comment about  RH (NYSE:RH) in its Q4 2022 investor letter:

“RH (NYSE:RH) is a leading luxury retailer in home furnishings, including high end luxury furniture, home décor, lighting, textiles, etc. We have a long history with RH as an existing holding in our U.S. SMID strategy, and we capitalized on the market volatility to add it to the Portfolio. The company’s competitive advantage stems from the strength of its brand and its unique—and often misunderstood—business model, which has allowed RH to build a luxury empire at scale and with high returns on capital. We believe RH has a long runway to expand into other home furnishings categories, expand its footprint internationally, and launch new luxury categories. While the business faces near-term challenges, and the stock’s valuation reflects this, we are confident in the company’s long-term prospects and the long track record of CEO Gary Friedman.”