After strong gains to start the week, stock market benchmarks have been struggling to find direction over the past couple of days. As of 1 p.m. ET, the Dow Jones Industrial Average (^DJI 0.69%) was up 18 points to 35,773, recovering from early losses. However, the S&P 500 (^GSPC 1.20%) remained down 9 points to 4,693, and the Nasdaq Composite (^IXIC 1.59%) was down a sharper 113 points to 15,673.
Investors are always interested in the stocks billionaire investing legend Warren Buffett has chosen, and on Thursday, a couple of the stocks you'll find among his holdings were in the news. Big gains came for upscale retailer RH (RH 1.37%), but things weren't as upbeat for cable television operator Charter Communications (CHTR 0.46%). Below, we'll take a closer look at what's moving these two Warren Buffett stocks on Thursday.
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RH keeps riding luxury retail higher
Shares of RH were up more than 9% Thursday afternoon. The upscale retailer of home furnishings and other high-end products kept up its positive momentum with strong results in its third-quarter financial report.
RH's numbers were impressive. Sales climbed 19% year over year to $1.01 billion, bringing its two-year total growth to 49%. Adjusted net income rose at an even healthier 25% rate from year-ago levels, as sizable gains in gross margin and operating margin pointed to RH's adept management of supply chain issues and labor costs.
Moreover, RH boosted its outlook for the full year. The company now expects revenue to rise 32% to 33% in fiscal 2021, which is at the higher end of its previous range for sales growth. Moreover, with ambitious expansion plans for 2022, RH is encouraging shareholders to look forward to the long run to understand the full potential that the upscale retailer has.
All in all, RH imagines being able to expand its ecosystem to capture a multi-trillion dollar luxury retail market worldwide. Even 1% share of that market would represent $70 billion to $100 billion of revenue -- and that's an attractive growth runway for RH shareholders to dream about in the years ahead.
A dying breed?
On a more downbeat note, shares of Charter Communications continued to give up ground. The cable operator's 5% drop on Thursday added to losses earlier in the week, and the stock is now down more than 10% from where it started Monday morning.
Investors have been nervous about the prospects for traditional cable and broadband internet companies for a while. Subscription growth is slowing, and several trends could have an adverse impact on the industry. For instance, streaming video has many customers of Charter and its peers cutting the cord. Moreover, as 5G wireless network capabilities open up the potential for wireless providers to compete effectively against wireline broadband services that Charter and similar companies offer, it could undermine the key broadband-centered strategy that has kept cable operators from seeing even bigger losses in recent years.
Even Buffett appears to have started losing confidence in Charter. The Oracle of Omaha reduced his position in the stock by more than 1 million shares in the third quarter of 2021, reducing his total holdings to about 4.2 million shares.
Charter still has an impressive subscriber base, and plenty of customers won't be in a hurry to search out alternatives. Nevertheless, the competitive threat is one that could keep Charter's stock on the defensive well into 2022.
