RH stock is ‘high-risk, high-reward,’ Jim Cramer says

CNBC’s Jim Cramer on Friday reviewed the stock of luxury home goods retailer RH, saying the company could succeed if the housing market strengthens.

“RH is high-risk, high-reward, but it really comes down to how you feel about housing,” Cramer said.

The stock has been a “rollercoaster” over the last several years as CEO Gary Friedman attempted to expand the business in the face of an economic downturn and a tough housing market, Cramer said.

RH started to decline about a year ago after the Federal Reserve stopped cutting rates and the Trump administration’s tariffs hit countries where RH does most of its manufacturing, he continued. In the months that followed, Wall Street was too worried about the state of the consumer to focus on the high-end chain, Cramer added.

But the stock has climbed over the last few weeks as investors anticipated more rate cuts and grew more positive about consumer spending, Cramer said. RH managed to pop this week in response to a mixed quarter that saw a revenue beat, but an earnings miss and weak guidance.

The stock finished Friday up 5.67%

Cramer noted that RH CEO Gary Friedman seemed upbeat in his quarterly shareholder letter, saying RH was taking share and had industry-leading sales growth despite macroeconomic challenges. However, Friedman also acknowledged risks the company is facing, including the uncertain housing market, tariffs and rising costs of construction.

Cramer stressed that RH remains “a highly levered way to play a potential housing recovery,” saying the stock could soar over the next few years if the Fed keeps cutting rates and the housing market rebounds.

“But if the housing market doesn’t materially improve, and the company continues to be rocked by tariffs, and Gary Friedman keeps forging boldly with his expansion strategy even if market conditions don’t really warrant it?” Cramer asked. “Well, then some very, very bad, self-inflicted outcomes could be on the table.”

RH did not immediately respond to request for comment.