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With stocks and luxury housing prices in major cities around the globe hitting new record highs, Restoration Hardware Holdings, Inc. (NYSE:RH) is perfectly situated to grow its luxury furniture brand. This Zacks Rank #1 (Strong Buy) is expected to post double digit earnings growth both this year and next.

It operates 74 galleries and 13 outlets selling furniture, lighting, bathware, outdoor and garden as well as baby & child products. If you've hung out in the interior decoration section of your local bookstore, you might also have seen some of its books. The company also operates a retail web site at

Restoration Hardware has had a topsy-turvy history as it nearly went under in the early 2000s and was privately-owned for several years. It re-emerged as a publicly traded company in late 2012.

Perfect Timing?

Is it a coincidence that Restoration Hardware, which has long been associated with luxury, went public just as the housing market was turning around? I think not.

Restoration Hardware has beaten its first two quarters as a public company. It is set to report fiscal first quarter on July 16 but the company has already clued us in on how good 2013 has been. On May 10, it increased first quarter fiscal 2013 guidance to $0.02 to $0.04 from a loss of 2 cents to breakeven.

Comparable store sales are expected to rise an astounding 41% on top of 26% growth in the first quarter of last year. This rate is nearly unheard of in retailing, especially from a retailer that has been around more than a decade.

The company said it saw stronger than expected customer response and it had a better inventory position. More details should be forthcoming after it reports.

Shares Soar

After pre-announcing the strong first quarter results, the shares took off to new highs.

Shares aren't cheap with a forward P/E of 40. But you're not buying it as a value stock. You're buying it for the growth as the housing market continues to improve.

Fiscal 2013 earnings are expected to rise 38% followed by another 21% in fiscal 2014.

Consumers are buying into the fantasy of the brand which it does an excellent job of marketing. I recently received three full sized catalogs in the mail for Spring that were so big my mailman had to leave them on top of the mailbox. And I don't even shop at the store. (The catalogs were beautiful, by the way.)

As an investor looking for a strong retail brand, Restoration Hardware should be on top of the list. It also serves double duty by providing a way to play housing's recovery.

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