The real estate market hit new records in May. According to Redfin, the median home sale price rose 24% year-over-year to a record-high of $354,250. Asking prices were also at records, climbing to a median $361,875.
Another new record includes the fact that 51% of homes sold above their initial listing price, a 26% year-over-year increase. Redfin also noted that houses sat on the market for an average 17 days, down from 36 days a year ago.
The truth of the matter is demand for housing is incredibly strong right now, and folks are looking to cash in. In fact, Realtor.com found that the second-biggest reason homeowners are selling is to simply make money in the current real estate market.
Not only are we currently in a great seller’s market, but this is also a great time for homebuilder stocks. The SPDR S&P Homebuilders ETF (XHB), which tracks the U.S. homebuilding industry, is up about 25% year-to-date.
To profit from all the aspects of the real estate boom, I’ve been filling my Growth Investor Buy Lists with fundamentally superior housing stocks well-positioned to profit amid all aspects of the real estate boom.
One such stock is RH (RH), or Restoration Hardware. It offers luxury home furnishings, including furniture, rugs, lighting and textiles. These furnishings are created by leading artisans, designers and manufacturers, and they are available in the company’s brick-and-mortar retail Galleries, as well as in catalogs, or Source Books, and online at RH’s four main websites: rh.com, rhbabyandchild.com, rhteen.com and rhmodern.com.
RH is also in the process of expanding its brand to include RH Guesthouses and RH Residences, which enable folks to stay in private, luxury accommodations. The company expects to open its first RH Guesthouse in New York City later this year and the second RH Guesthouse in Aspen, Colorado, in the fall of 2022. The Aspen Guesthouse is also set to include the first RH Bath House & Spa.
Given the influx in folks buying a new home, as well as many more nesting in their current homes amidst the pandemic, there’s been an increased demand for home furnishings, which has added handsomely to RH’s top and bottom lines.
Case in point: On Wednesday, RH released stunning first-quarter earnings results. Adjusted net income surged 375% year-over-year to $142.3 million, compared to net income of $29.9 million a year ago. Adjusted earnings per share soared 285% to $4.89, up from earnings of $1.27 a year ago. Analysts were expecting earnings of $4.10, so the company posted a 19.3% earnings surprise. Revenue rose 78% year-over-year to $860.8 million.
Full-year revenue is expected to grow between 25% and 30%, up from previous estimates for 15% to 20% growth. And for the second quarter, revenue is now forecast to increase between 35% and 37%, compared to previous forecasts for 25.9% to 26.1% growth.
Company management also noted, “While fiscal 2021 will surely be a tale of two halves, there are many data points that lead us to feel optimistic that our strong performance will continue through the second half of 2021 with growth reaccelerating in fiscal 2022 and beyond. These include a strong housing and renovation market, both with pent up demand and a long tail, a record stock market, low interest rates and the reopening of several large parts of our economy.”
The stock stormed out of the gate Thursday morning, surging nearly 16% by the close. With several tailwinds at its back, I look for this week’s strength to be the beginning of a new uptrend.
Now, my Portfolio Grader already flagged the stock as a “Strong Buy” ahead of RH’s earnings report. So, folks following my Portfolio Grader would’ve had an opportunity to buy in early and ride RH’s post-earnings wave.
This goes for my Growth Investor subscribers, too, as I recommended the stock on April 30, 2021. Of, course, this isn’t the only housing stock I like right now. As I mentioned, I’ve added several others to my Growth Investor Buy Lists in recent months, including other specialty retailers, a homebuilder and more. If you see as much potential in the homebuilding space as I do, sign up here to find out the names – plus all my other recommendations across a wide variety of innovative sectors.
P.S. There’s a great divide opening up in America and investing in my Growth Investor stocks will help get you on the right side of it. On one side is a new aristocracy that’s amassing more wealth more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.
On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.
What’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.
Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.
It’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.
It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.
It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owned the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below: