I believe the IFG forum could be better utilized for sharing investment ideas. Taking inspiration from other communities like the Value Investors Club, I wanted to contribute my own insights here with the goal of adding value. As a disclosure, this stock is in my personal portfolio because of its future growth potential. Don’t decide to invest without your own research.
Arhus Inc. (ARHS), is a premium home furnishing company with an objectively great business model. They focus on physical showrooms in high traffic and high income areas, and the rest of the business concentrates on online retail. Pairing this with an impressive amount of vertical integration compared to other furnishers proves that Arhaus has great growth potential with a reasonable enterprise value to EBIT ratio.
If you had to draw parallels between Arhaus and any other company, it would have to be Restoration Hardware. Both focus on luxury and highly customizable furnishings. While both have a comparable FCF yield (3%), ARHS has a much higher return on capital (33%) than RH (16%)*. *Calculated with a proprietary formula.
In terms of compliance, Arhaus meets all criteria for the five major Shariah standards (AAOIFI, S&P, DJIM, FTSE, MSCI). This includes no non-compliant assets, less than 1% impure income, and a debt ratio of ~4%. With less than ideal economic conditions on the horizon, Arhaus is in a great position to outpace the market during a horizontal trend, and explosive growth in the period afterwards.
If you have any questions or comments, feel free to contact me at [email protected].