Billionaire David E. Shaw’s 10 Small-Cap Stock Picks with Huge Upside Potential

4. RH (NYSE:RH)

D. E. Shaw’s Equity Stake: $73.95 Million

Market Capitalization as of May 9: $3.60 Billion

Stock Upside Potential as of May 9: 41.25%

Number of Hedge Fund Holders: 51

RH (NYSE:RH) is a retailer and lifestyle brand in the home furnishings market. It offers products in various categories, including furniture, outdoor and garden, baby, child, and teen furnishings. The stock is again finding its footing after plunging by more than 20% in April on issuing a weaker-than-expected outlook and warning that it is facing the worst housing market in 50 years.

Amid the warning, the specialty retailer reiterated that it expects revenue in 2025 to grow between 10% and 13%. The solid outlook also came on the retailer posting a 10% year-over-year revenue increase in the fourth quarter of 2025 at $812.4 million. Adjusted net income more than doubled to $31.7 million, or $1.58 a share, compared to $14.3 million, or 72 cents a share, delivered the same quarter last year.

While RH (NYSE:RH) has been hit hard by the high interest rate environment and inflationary climate, it continues opening new galleries and expanding into new regions in pursuit of growth opportunities. The company also operates high-end restaurants, guesthouses, jets, and yachts as it seeks to flex its muscle in the global luxury market. Goldman Sachs analyst Kate McShane has reiterated a Hold rating on the stock, cutting the price target to $194 from $276.