12 Best Industrial Distribution Stocks to Buy According to Hedge Funds

1. Ferguson Enterprises Inc. (NYSE:FERG)

Number of Hedge Fund Holders: 62

Ferguson Enterprises Inc. (NYSE:FERG) is the largest value-added distributor catering to the specialized professional in its $340 billion residential and non-residential North American construction market. Ferguson is an integral part of repair, maintenance, and improvement as well as new construction projects.

Ferguson has leading positions in large, growing, and fragmented North American markets including HVAC, residential building and remodel, waterworks, and residential trade plumbing, among others. Simultaneously, the firm’s ability to deploy scale locally delivers sustainable market outperformance. The track record of outperformance and cash generation stands robust, with revenue and adjusted operating profit CAGR of +49% and +78% between FY20 and FY24.

Kevin Murphy, Ferguson CEO, exclaimed his confidence in the firm’s continued market outperformance and pointed to the bright company’s prospects in the Q1 FY2025 earnings call as he stated:

“We expect to continue to outperform our markets as we leverage multiyear structural tailwinds. Our size, scale, and strategy, we believe we are well positioned to take advantage of opportunities in the underbuilt and aging US housing market, nonresidential large capital projects, and the growing demand for plumbing and HVAC specialized professionals”

While we acknowledge the potential of FERG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than FERG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

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