5 American Stocks That Will Benefit from China’s Economic Slowdown

3. RH (NYSE:RH)

Number of Hedge Fund Holders: 63

RH (NYSE:RH) is a California-based retailer of furniture and home furnishings. As China’s economy is crippled with slowing growth and supply chain challenges, demand for American retailers like RH (NYSE:RH) will be on the rise as Chinese exports to the US decline. Citi analyst Steven Zaccone said on July 1 that core investor concerns after RH (NYSE:RH)’s second guidance revision in a month are weakening business and execution risk on its strategic plans. The analyst shared the investors’ short-term concerns, but believes “a lot of damage is already priced in”. He noted that RH (NYSE:RH) now trades at nine-times his slashed fiscal 2023 earnings estimates, which he views “as the most extreme bear case” earnings case. The stock’s risk/reward “skews to significantly more upside than downside at current valuation”, said the analyst, while keeping a Buy rating on RH (NYSE:RH) with a $338 price target. 

Among the hedge funds tracked by Insider Monkey, 63 funds were long RH (NYSE:RH) at the end of Q1 2022, up from 58 funds in the last quarter. Warren Buffett’s Berkshire Hathaway is the leading stakeholder of the company, with 2.17 million shares worth $707.6 million. 

Here is what Polen US SMID Company Growth Fund has to say about RH (NYSE:RH) in its Q1 2022 investor letter:

“RH is a furniture store company with brand recognition and a unique business model. The company’s stock price fell sharply over the first three months of 2022 despite solid operating results, which resulted in what we believed to be an attractive opportunity to add to our position in the company. We are mindful that, on the margin, the company is certainly experiencing some early impact from record inflation and rising interest rates, and we feel comfortable in both the management team’s ability to navigate these challenges and the power of the company’s brand and its long-term potential.”