RH's (NYSE:RH) Gains, Market Conditions, Make It Increasingly Attractive

No matter how you may feel about RH, formerly Restoration Hardware (NYSE:RH), it's made a lot of significant moves in the last several months. Throw in the overall condition of the market—and the growing interest in improving one's home to prepare for longer stays therein—and there's suddenly a lot of demand for operations like RH. The market, meanwhile, is beginning to realize that for itself, and there's a good slug of support going in behind RH as a result.

A Growing Confidence From Without

Where RH might have seemed previously like a furniture store for the particularly wealthy, there's evidence that its appeal is expanding. One of the biggest points in support of this came from Wells Fargo, who bumped up the price target on RH's operations to $365 from its previous level of $280. That represents an upside of about $25 off its current level, and that after a gain of about $10 off its previous close.

As impressive as that is, that's just for starters. The stock has had a consensus rating of “buy” based on our research for the last three months. The consensus rating overall remains what it was 30 days ago, at 2.56 total, but that's an increase from 90 days ago at 2.5. That in turn was an increase from 2.39 180 days ago, showing a nice upward trend. Buy ratings have increased from 180 days ago too, going from seven such ratings to nine, even as hold ratings departed the stock's analysis altogether.

Several other firms have recently hiked their own price targets on the company; Guggenheim went from $140 to $300, while Wedbush put it up from $150 to $270. JPMorgan Chase & Co. upgraded from $135 to $270, fully double its original target.

There's a Reason For It

Basically, growing numbers of analysts are increasingly confident that RH can deliver, and deliver big. We know from our previous encounters with the company that it's making significant moves, including using yachts and hotel rooms as a way to display its high-end furniture options in the perfect fashion possible: by letting people live with the curated rooms for however long they're in the hotel or on the yacht, the RH3.

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It's clear that RH is willing to draw interested buyers by any means available, and that's certainly reflected in the stock price, which is making a steady climb upward. Given that the stock currently represents the best performer in the last three months in Warren Buffett's Berkshire Hathaway portfolio, that's another point in its favor.

Even better, RH has demonstrated its community-minded nature, taking on restoration projects all over. One of its latest focuses on a building known as the Abbey, a 1904 Gilded Age mansion in Morris Township, New Jersey. The project is still in the planning stages and recently involved meetings with Morris Township residents, but features plans that some call the last, best hope for the Abbey. RH would use it as a showroom for its product line—another one, actually—and one section would be demolished to make room for a combination restaurant and wine bar.

A Market In the Mood

RH has demonstrated its ability to succeed in the market, and its willingness to branch out to prove to others the kind of value it can generate. Whether it's restoring historical buildings, or making some truly dazzling hotel rooms, RH has the necessary furnishing to make most any home feel like a palace.

That's where the broader market conditions kick in to give this some extra edge. Despite moves to re-open elements of the economy outside our door, many are choosing to stay home as much as possible. That's putting money that would have gone into vacations or travel to work elsewhere, and upgraded furniture is definitely part of that mix.

As people continue upgrading their homes, preparing for what may continue to be a pretty long stay therein, companies like RH are likely to gain ground. Sure, there will be competition; we've already seen Wayfair (NYSE:W) do wonders, and its upward trajectory noticed back in June has continued well into today, with a few bumps in the road.  Williams-Sonoma (NYSE:WSM) looks like it's plateaued over the last few months, but is still putting on a solid showing. But with a market hungry for more, and so many analysts behind it already, RH may have the chops to come out on top.