The IBD SmartSelect Composite Rating for RH increased from 94 to 96 Thursday.

The new rating shows the stock is outpacing 96% of all stocks when it comes to the most important stock-picking criteria. The top-performing stocks tend to have a 95 or better grade as they launch a significant move so be sure to keep that in mind when looking for the best stocks to buy and watch.

RH broke out earlier, but is now trading approximately 1% below the prior 719.87 entry from a cup with handle. If a stock you're watching climbs above a buy point then declines 7% or more below the original entry price, it's considered a failed base. It's best to wait for the stock to form a new pattern and breakout.

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The stock has a 98 EPS Rating, meaning its recent quarterly and longer-term annual earnings growth tops 98% of all stocks.

Its Accumulation/Distribution Rating of C shows a roughly equal amount of buying and selling by institutional investors over the last 13 weeks.

In Q2, the company reported 73% earnings-per-share growth. Top line growth fell to 39%, down from 78% in the previous quarter.

RH holds the No. 1 rank among its peers in the Retail-Home Furnishings industry group. Williams Sonoma and The Container Store are also among the group's highest-rated stocks.