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Jim Cramer Views Restoration Hardware as Model for High Stock Prices

If you want to see the hottest financial news that’s trending today, Check out this recommended article below.


ETF Trends•June 14, 2018

This article was originally published on ETFTrends.com.

Jim Cramer, founder of TheStreet and host of CNBC’s Mad Money used Restoration Hardware as the model for a recipe of higher stock prices.

Cramer told TheStreet that the key ingredients for a higher stock price include a robust consumer, a big short position in the stock and sharply better-than-expected earnings per share–all factors inherent in the Corte Madera, California-based home furnishing company.

In particular, Cramer was effusive in his praise for Restoration Hardware CEO Gary Friedman who took over the company in 2001 when it was on the verge of bankruptcy before helping to turn it into the powerhouse that it is today.

“Gary (Friedman) is a remarkable merchant,” Cramer told TheStreet. “His stores are not stores; they’re galleries and it’s exciting and we’ve used a lot of his stuff. Gary has got a vision and he’s got a way to run a company. Congratulations, Gary–you really did it. The stock’s not done going higher.”


Related: Jim Cramer: How to Diversify Your Portfolio
Restoration Hardware is currently trading at almost three times its stock price compared to a year ago. As of 2:00 pm Eastern, RH was up 0.07%.

ETFs with a large percentage of Restoration Hardware are worth a look, including Invesco S&P Small Cap Cnsmr Discret ETF (PSCD) , Invesco S&P SmallCap 600Â Pure Value ETF (RZV) , and First Trust Small Cap Val AlphaDEXÂ ETF (FYT) .

Click here for more equity-related ETF news.

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4 Stocks That Could Double in 2017

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Will an Interest Rate Hike Kill the Stock Market?

Ryan Fitzwater

by Ryan Fitzwater, Senior Research Analyst, The Oxford Club

It’s happening again.

Everyone is clamoring over the Fed’s upcoming Federal Open Market Committee (FOMC) meeting set to take place December 16.

The big question on investors’ minds is: Will the Fed finally abandon its zero-interest rate policy and raise rates?

As you can see in the chart below, our current monetary policy is unprecedented. Abnormal. Insane even. No doubt, it will have its own chapter in the history books.

Rates have been stuck close to zero for five years and counting. Hence the term “zero-interest rate policy (ZIRP)” that comes from a mixture of slow economic growth and low interest rates.

It’s not Earth-shattering news that interest rates are in ultra-low territory. In many ways, rates are virtually nonexistent. That fact has stirred one of the greatest, most resilient bull markets in history.

RECOMMENDED: How to Survive and Thrive an Interest Rate Hike
But many investors are focused on a single idea. They ponder if the Federal Reserve will start to raise rates.

But we ask… Would an increase be so awful?

Most people think a hike is bad news. It will kill our sluggish economy, they argue. But if and when rates get lifted, these folks will miss out on a big opportunity to profit. You only have to look at the past to see why.

Why Smart Investors Should Be Praying for a Rate Hike

The chart below illustrates how the market reacted the last six times the Fed increased rates. To make this comparison as accurate as possible, we only looked at increases that came after a rate decrease.

As you can see, history shows that the anxiety surrounding higher rates – and its supposed negative impact on the markets – is unwarranted.

The numbers are broken out in the table below.

In the three-, six-, 12- and 18-month periods after a rate hike, the S&P has averaged positive returns. In fact, a year out, the index is showing more than a 12% gain. So while the initial market drop may seem unnerving, history has shown that it’s followed by a strong rebound.

Of course, the S&P 500 is a broad-based index. And as we dug deeper, our research revealed that not every sector and stock is a winner.

RELATED: Historic stock losers following rate increases revealed… Read it now.
In fact, specific sectors historically get crushed by rate increases.

For example, energy tends to underperform following a rate increase. But add in $200 billion in high-yield energy debt, crashing crude prices and negative cash flow, and we see potential bankruptcies on the horizon. You don’t want to have any exposure to stocks in these industries after a rate hike.

At the same time, we discovered specific sectors and assets that completely crush it after a rate hike. Information technology (IT) is one sector that jumps an average 16.12%. The top performers do even better.

A lot of time and research went into discovering the winners and losers following these increases. So we put together a special report called “How to Survive and Thrive an Interest Rate Hike.”

Inside, you’ll discover what you need to do to protect your wealth immediately after a rate increase. And you’ll also learn how to book substantial profits in a rising rate environment.

Just enter your email address below to get instant access to this eye-opening report for free on the Investment U website:

The link to your free report will be sent to the email address you enter above, as well as continuing updates through a complimentary new subscription to Investment U newsletter, plus investment news, analysis, recommendations, flash alerts and special offers. You can unsubscribe at any time. We respect your privacy.

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Dow tops 18,000 on GDP report

stock-photo-stock-market-price-display-abstract-88412323Related Stories

NEW YORK (Reuters) – U.S. stocks rose for a fifth straight session on Tuesday, with the Dow climbing above 18,000 for the first time ever after an unexpectedly strong report on economic growth.

Both the Dow and S&P 500 hit intraday records, and the S&P is on track for its 51st record close of 2014. The gains pushed the Dow as high as 18,051.14, and the blue-chip index is now up about 175 percent from a 12-year low hit on March 9, 2009.

The final estimate for third-quarter U.S. economic growth was revised up to a 5 percent annual pace, its quickest in 11 years and easily topping expectations calling for growth of 4.3 percent.

“Everyone is surprised, and I’m definitely pleased,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services in New York. “How can inflation be so low when GDP is so high? Either this is just a one-off and GDP will fall back dramatically, or we’ll see a pickup in inflation, which could put more pressure on the Fed.”

The report spurred a broad rally, with nine of the ten primary S&P 500 sectors higher on the day. The only group to fall was healthcare (.SPXHC), down 2.5 percent alongside a massive drop in biotech stocks.

The Nasdaq biotech index (.NBI) fell 5.4 percent, its biggest one-day decline since April 10. Components of the index made up the top six percentage decliners on the S&P; Celgene Corp (CELG.O) fell 8 percent to $104.49 while Biogen (BIIB.O) lost 6.6 percent to $329.14 and Regeneron Pharmaceuticals (REGN.O) lost 6 percent to $388.

Gilead Pharmaceuticals (GILD.O) fell 4.5 percent to $88.70, extending Monday’s drop of 14 percent, which came after Express Scripts (ESRX.O) said it would abandon covering Gilead’s hepatitis C treatment in favor of a cheaper option.

“This is just a kneejerk reaction, based on a bear thesis that Express Scripts will start to dictate prices,” said Kaufman. “I don’t see how this is any different than any other company in another sector getting more competition. Soon people will go through the stocks one-by-one to see which got oversold.”

At 1:10 p.m. (1810 GMT) the Dow Jones industrial average (.DJI) rose 99.21 points, or 0.55 percent, to 18,058.65, the S&P 500 (.SPX) gained 5.72 points, or 0.28 percent, to 2,084.26 and the Nasdaq Composite (.IXIC) dropped 12.25 points, or 0.26 percent, to 4,769.17.

In addition to the GDP report, data showed a solid rise in consumer spending while consumer sentiment hit its highest level in nearly eight years. Separately, durable goods orders unexpectedly fell in November while new home sales fell for a second straight month.

Trading volume is expected to be light this week due to the Christmas holiday, which could increase volatility. U.S. equity markets will open for an abbreviated session Wednesday and be closed on Thursday.

Advancing issues outnumbered declining ones on the NYSE by 2,086 to 932, for a 2.24-to-1 ratio on the upside; on the Nasdaq, 1,463 issues rose and 1,222 fell for a 1.20-to-1 ratio favoring advancers.

The benchmark S&P 500 index was posting 113 new 52-week highs and 5 new lows; the Nasdaq Composite was recording 164 new highs and 42 new lows.

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