The Home Depot, Inc. (HD), And A Great Under-the-Radar Investment to Trade Considerably Higher

Compared to last year, Restoration Hardware has the same number of total stores, meaning that all of its growth is coming from comparable store sales. In fact, comparable store sales rose 26% yoy, which is a major indicator of performance in retail, and is far above other high-profile retail companies such as Michael Kors or Lululemon. This explosive growth despite no store expansion suggests near perfection of behalf of management’s ability to place stores and market itself. This bodes well for the company as it aims to begin the next phase of growth, which is expansion into new markets. Finally, when you consider its cheap price compared to sales and future earnings, you can see that it’s a $1.35 billion company that could explode into a serious competitor in the home improvement space, presenting a great investment opportunity.

Conclusion

I find it mindboggling that Restoration Hardware Holdings Inc (NYSE:RH) is posting 30% comparable store sales growth, continues to operate the same number of stores, and has posted 12 consecutive quarters of double digit growth. In this retail environment, I doubt you can find any other company with equal performance, yet the stock has flown under-the-radar, unnoticed, with virtually all of its one-year gains coming on Friday after earnings. As a result, the stock is cheap, and has not performed with fundamental growth. However, with all companies in the market, sooner or later stock performance will reflect fundamental performance. For some it may take longer than others.

But In the case of RH, I would watch it closely, as I believe this latest quarter simply woke investors and that now we will see a great growth story appreciate to post very large gains.

The article A Great Under-the-Radar Investment to Trade Considerably Higher originally appeared on Fool.com.

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