RH is a buy; new store formats and real estate recovery support upside to $300-$550 in coming years.

Next up here, uh, let's talk about a stock I spent $100,000 on today. I think I got a big opportunity here. I think I'm going to make a lot of money. Maybe I don't.

The stock I bought here today, RH. I bought RH in the public account for the first time ever. First time I bought RH in the public account, did a $50,000 one-off buy. Now, additionally, I bought another $50,000 today in a private portfolio.

So, if you add up the math on this, I bought $150,000 of RH in less than a week.

This is one of those stocks I think a lot of people are going to have trouble wrapping their heads around, okay? And I really want to explain why I think I have something special here, okay?

And I could be completely wrong, but I think I got something special and I really need to explain this to everybody, right?

RH is like, but why? I'll show you why. The stock has gone down 82% the past five years. 82%. That's awful performance, right? Just absolutely awful.

But the previous 5 years, do you know what the performance with RH was? 2,200% gain. I repeat, 2,200% gain the previous 5-year period. Not too bad, huh? Not too bad.

Now, from the IPO, this company went IPO in in 2012, right through into the fourth quarter of 2015, the stock went from 30 bucks to 100 like that. And then in a matter of months, it went from 100 to 25. The stock dropped 75% just like that.

At the end of the day, this company is a cyclical company. Okay? And so the expansion phases are unbelievable. The depressions in these stocks are absolutely brutal. As I illustrated here, a stock to go down 82% over a 5year span.

I mean, that is just absolutely brutal, right? And it's not that it went down all at once. Like there was that initial huge move down, right? But at the end of the day, RH moved down over a huge period of time, right?

And every time you got some hope that the stock was coming back, it just went lower.

Now, when it comes to RH, right, this company builds these ridiculous like stores. Okay. and and they're beautiful, but it's just astronomically like ridiculously priced. And you know, when we're talking about these stores, RH builds, they're like multilevel.

They involve elaborate staircases and elaborate elevators in crazy steel construction cuz they're almost building like a high-rise and then they'll put a roof on the excuse me, a roof. They'll put a restaurant on the roof, right?

Well, they're changing up the game here. Okay, so now they're going to start building what they call RH compounds. Now, this is going to be really, really fascinating cuz what it's going to be, it's going to be multiple onestory buildings.

Okay, multiple one-story buildings, which if you understand anything about construction, okay, you understand it is going to be so much simpler to build multiple one-story buildings and so much more cost effective than building these mega mansion structures that RH builds right now.

Like, it's a night and day difference, okay? Like, you can get one of these structures built in, you know, a month or a couple months. It it's incredible, right? You're not building one of these bad boys in a couple months. Like that's not that's just not happening.

And so these are going to be fascinating and they're going to have it all like kind of segmented, you know, depending upon if you're looking at this sort of furniture or if you're looking at maybe, you know, more let's call it um like I don't know fake plants and mirrors and decor related stuff or do you want to look at you know uh more like we can call it modern furniture or contemporary furniture or those sorts of things, right?

In the middle of these compounds, they're going to place like around a 4,000 ft restaurant and wine bar.

Now, RH's restaurants are top tier, okay? Like top tier. Like phenomenal food quality. I've been to I've been to the San Francisco location. I've been to the Marin location. I've been to the New York locations multiple times.

I've been to the Charlotte, North Carolina uh location, and I've probably been to another location or two. Restaurants, phenomenal service, phenomenal food quality. Like you could go there on like an anniversary like that. like that's how like nice and how good the food quality is at these places.

And so they're going to put one of those in the middle of the structure essentially, right? And so I think the concept's brilliant because they're going to be able to cut down on cost, but I also think it's going to be a cooler experience than actually just cuz the stores, they look great from the outside.

The issue though is once you go into an RH, like it's just, you know, it's just a lot of kind of walking around in the same space. These are going to be connected with like fountains and trees and like you know you're going to walk in between buildings and it it's going to be a pretty darn cool experience, right?

Glass roofed walkways and um yeah, like I'm looking really forward to experiencing this once they actually open one. They've got a couple that are under construction right now in Florida. So do keep that in mind.

Okay. Now the other thing I don't know if you guys listen to the conference call on thousandx.com but if you care anything about RH and you want to do some dating on this company listen to the conference call.

Okay so Gary Freriedman on that conference call was talking about like partners on these projects would be much more financially interested in doing this with RH. Why? Let me explain. one of these buildings.

Okay. It's hard to get RH to partner with other landlords or get financing and things like that because the buildings are so ridiculous. Like if let's say RH went bankrupt. Who the freak is buying this building?

Like who else is going to go there? That's just ridiculous, right? And so it's completely like unrealistic. However, with these new compounds, you could get financing much easier of people to partner because let's say RH went bankrupt, right?

And so now this is is available. You could put restaurants in these. You could put different stores in these. It's so so much more compelling to finance projects like this for our age than something like this.

Okay? And Gary Freriedman was explaining that in the conference call. So it's really really valuable to listen to stuff like that and you really start to understand oh this is actually like a bigger game changer than I think anybody realizes.

Now Gary Freeman was also talking about these new formats can be about 50% more cost effective 50% than the old structures like this is the one they just opened in Newport Beach uh two years ago which that's now uh RH's most successful or second most successful location from my understanding.

The only one that's beaten them is a New York location, right, that I've been to a few times. But uh like that's incredible. Like if you can save that much cost that what this is going to do to RH's expansion ability, right?

And what this is going to be do the margins. Now, if this is also a cooler experience, you're going to get more traffic as well, right? More traffic. So, this is like is brilliant on multiple levels.

And I'm not talking multiple levels like RH's old uh store format was here right now.

Additionally, they talked about RH Estates. So RH Estates is a luxury home furnishing collection in brand extension by RH focused on traditional and classic classic design reimagined through a contemporary lens.

And this collection Gary Freriedman is talking about this is going to be huge for the company over time. We'll see like that's one of those things like you know some some collections hit some miss.

We'll see. RH Modern's always been a huge success for them. So, this is one of those things I'm like, I don't know, we'll see. He He's talking about this could exponentially increase the TAM of the business.

So, just something to kind of keep in mind there.

Right now, here's the deal with RH stock. Where's the stock going? Okay, listen. If the market gets ugly, short-term, the stock going to 90 to $100. Okay, so still, you know, we can call it 20 to 30% more downside from here.

If the market gets ugly, okay, if we get a world ending recession, the company's going bankrupt, BK, lose it all. And I say, how do you feel comfortable investing? I'll feel comfortable because I won't get overleveraged in a position.

Well, first off, I don't even take leverage out for positions, but when I say overlever, I mean I won't invest too much that I'm afraid to lose it, right? Like, and so that's the way I look at that, right?

And then next up here, like real estate's been dead for years. We all know that, right? So, it's hard to see real estate getting much worse than this over the next few years cuz like literally this is about the worst real estate market we've ever seen.

And so, real estate in my opinion comes back 2027 to 2030. And so, if that occurs, I think the stock goes to anywhere between $300 and 550. Even under my bold case, I don't have the stock going to 700 plus like it was at the peak.

My best case scenario is it goes to about 550, right, over the next few years. But that's significant upside and it's hard for me to find stocks out there that I think have a potential that for me to we can call it 2x to 4x my money on that stock over the next you know uh 3 to 5 years.

It's hard to find those sort of opportunities and so this is one and I'm willing to take it right and I will tell you I have worked patience on this stock. This is a stock I have followed for over 10 years and I've kept so, you know, track of the company so well throughout their upcycles and down cycles and I've just been waiting for the perfect opportunity to start building a big position in the stock and here it is.

The moment is finally here, right? And so it has been patience and I'm glad I've waited all this time cuz now all the pieces are coming together

And I wouldn't look at RH as, oh, I'm going to make life-changing money in it. I'm just looking at it from the perspective, I think I can make a lot of money in the stock over the next few years, right?

And I'm willing to risk what I'm willing to risk, right? And so I like it. I like it a lot.