Top stock ideas (Wed, Nov 15)

👋 Good Morning!

We have a BIG redesign today!

Why the redesign?

  • The previous newsletter was too long and would get cut off in certain email clients which was hurting my deliverability

  • I’m thinking this email can act as the hub for all of the stock market tools I am building. This email will give you an overview of the important stuff happening in the stock market and then if you want to dive deeper into certain aspects, you can visit the newsletters/tools that focus on that (like Market Mornings for news, CEO Watcher for insider trades, and the new Yellowbrick Road Stock Ideas web page for more stock ideas each day).

Reply to this email with your initial thoughts on the changes! If we all hate it, we can always go back to stock ideas only.

Connor

* If you missed yesterday’s email, don’t forget to read it here

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MARKET OVERVIEW

Are you short-term bullish or bearish?

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The market got significantly more bullish after the inflation numbers came out lower than expected. Small caps stocks (Russell index) finally turned positive for the year, all of the indexes were up over 1%, and the Fear and Greed Index jumped 6 points and entered neutral territory.

FEATURED STOCK IDEA

BLOG POST

Restoration Hardware’s Growth Inflection and Share Repurchases

RH, together with its subsidiaries, operates as a retailer in the home furnishings and operates under RH Galleries and RH brand names in the District of Columbia and Canada, as well as Waterworks showrooms throughout the United States and the United Kingdom.

Ticker: $RH | Price: $233 | Price Target: N/A | Timeframe: N/A

🛋️ Home Furnishings | 🛍️ Retail | 📈 Bullish Idea

Restoration Hardware (RH) is undergoing a major brand "relaunch" with an 80% refresh of its product lines, introducing new styles and collections that are expected to drive growth and enhance same-store sales. Despite a 19% year-over-year revenue decline, RH is optimistic about its future, marked by a significant share buyback of 17% last quarter, indicating confidence in future earnings. CEO Gary Friedman has underscored the company's opportunistic approach to buybacks, similar to Warren Buffett's strategy. The relaunch includes high-quality European and American materials, with improvements in both product availability and delivery times, signaling a strengthened supply chain. The company has invested $1.2 billion in its stock, betting on the relaunch's success, with expectations for an earnings inflection in the second half of the year and peak in the first half of 2024. RH's strategic moves, including international expansion and gallery growth, aim to capitalize on the relaunch, with the stock's future earnings potential deemed attractive. RH evenre purchased 17% of its shares last quarter at an average repurchase price of $295 showing their confidence in the business.

Read the full article here. Read time: 9 min

How do you rate today's featured trade?

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TODAY’S TOP NEWS

Today’s news is brought to you by The Hustle. They are the #1 news source read by entrepreneurs, CEOs, and business owners. Subscribe now or learn more here.

Inflation was flat in October from the prior month, core CPI lower than expected - CNBC 

Technology stocks hit record high as Nasdaq looks to exit correction territory - Market Watch

Home Depot earnings beat, but retailer offers a tepid outlook as sales slide - CNBC 

Airbnb acquires AI startup for just under $200 million - CNBC 

Rivian to raise nearly $15 bln in debt for EV plant in Georgia - Reuters 

Snap shares jump on deal with Amazon that lets users buy products without changing apps - CNBC 

* If you want all of the most important stock market news each morning, sign up for my Market Mornings newsletter.

INSIDER TRADES

The insider trades are brought to you by CEO Watcher (another free, weekly email I write). It’s the only newsletter that tracks insider returns to find the best ones.

A director at Block ($SQ) bought $27.5M (link)

Two directors at Vita Coca ($COCO) sold $110M each (link, link)

A 10% owner at Duolingo ($DUOL) sold $35M (link)

The CEO of Air Products and Chemicals ($APD) bought $2.9M (link)

A 10% owner of Aeva Technologies ($AEVA) increased their holdings by 91% (link)

QUIZ

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Who is known as the "Bond King" and co-founded PIMCO?

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Yesterday’s Question (link): Who is credited with creating the first mutual fund?

Answer: Adrian van Ketwich. All the way back in 1773 in Amsterdan, Adrian created the first mutual fund with the aim to provide small investors with an opportunity to diversify.

LINKS YOU’LL LOVE

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MORE STOCK IDEAS

Want more stock ideas?

I can’t fit all of the day’s best stock ideas into the email because it makes the email too long and it gets cut off by some email clients.

So I post all of the day’s stock ideas on the Yellowbrick Road Stock Ideas web page and the Yellowbrick Road Twitter account.

These extra stock ideas often include more sophisticated stock ideas like merger arbitrage, short reports, and international stocks.

Today’s extra stock ideas include:

  • Pro-dex (PDEX) - a holding by Long Cast Advisors

  • An analyst report on GRAB with 35% upside

INVITE YOUR FRIENDS

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