In this article, we will be exploring ten stocks that hedge funds are talking about right now. You can read the first section of the article here. The discussion of the final five stocks is given below:
5. Lowe’s Companies, Inc. (NYSE:LOW)
2024 Performance: 2.6%
Number of Hedge Fund Holdings:68
Established in 1921, Lowe’s Companies, Inc. (NYSE:LOW) is US US-based home improvement retailer. The company focuses on providing safe and affordable homes, employing about 300,000 people and operating over 1700 retail stores. The company reported a year-over-year growth rate of -11.01% in 2023; however, growth is expected to be -7.00% this year and 10.4% the next year. Reduced sales was the reason for last year’s drop. According to Yahoo Finance, the PE ratio stands at 17.44% indicating an attractive valuation. The company’s strong business, appealing value, and strong growth catalysts make it a compelling investment.
Aristotle Capital’s Value Equity Strategy stated the following regarding Lowe’s Companies, Inc. (NYSE:LOW) in its first quarter 2024 investor letter:
“During the quarter, we sold our positions in Phillips 66 and Sysco and invested in two new positions: Lowe’s Companies, Inc. (NYSE:LOW) and TotalEnergies.
Based in North Carolina, and with a history dating back to 1921, Lowe’s Companies is the world’s second-largest home improvement retailer (after Home Depot). The company operates more than 1,700 stores in the United States that offer a wide variety of products to enhance a home, from plants for the garden and house décor to hardware and appliances. Often located in suburban areas, Lowe’s stores primarily serve retail “do-it-yourself” customers (~75% of revenue) and sell products that are used for home maintenance and repair (over 60% of revenue). This contrasts with Home Depot, whose stores have a higher presence in metropolitan areas and cater more to professional customers.
We had previously been investors in Home Depot. Over much of the past decade Home Depot had, in our opinion, executed better than Lowe’s—expanding its presence with large professional customers and increasing its store productivity. However, with Lowe’s hiring of former Home Depot executive Marvin Ellison in 2018, we believe Lowe’s has started the process of closing the gap to better compete with its nearest rival…” (Click here to read the full text)
4. Builders FirstSource, Inc. (NYSE:BLDR)
2024 performance: 9.08%
Number of Hedge Fund Holdings: 61
Based in Irving, Texas, Builders FirstSource, Inc. (NYSE:BLDR) is a manufacturer and supplier of building materials, manufactured components, and construction services. It is trading at $177.03 per share on 19 April 2024 and has a market capitalization of $21.587 billion. The company reported a 24.8% decrease in revenue in 2023 compared to 2022. An increase in interest rates and a general slowdown in the market affected sales in 2023. Investors love BLDR because of its strong financials, the potential for a high multiple, and steady profit growth, even though interest rate swings have an impact on the company.
Black Bear Value Partners stated the following regarding Builders FirstSource, Inc. (NYSE:BLDR) in its first quarter 2024 investor letter:
“We have a high-class problem with Builders FirstSource, Inc. (NYSE:BLDR). On the one hand we largely bought the business ~$50 a share and today it’s trading north of $200. Part of the appreciation is directly related to the Company’s buyback (thank you management team!). We own more of the company without having to put out additional capital. But before we take victory laps let’s stay objective as it remains a top 5 position. Note I still think BLDR is cheap.
One of the harder aspects of investing is knowing when to sell, especially when a business has performed wonderfully. There are many thoughts from smart people who contradict each other. Should you sell a business when it hits “fair value”? What about the tax implications? Should you trim along the way and buy what’s not going up? Some would call this pulling your flowers to water your weeds…” (Click here to read the full text)
3. Climb Global Solutions, Inc. (NASDAQ:CLMB)
2024 Performance: 21.45%
Number of hedge fund holdings: 4
Established in 1982, Climb Global Solutions, Inc. (NASDAQ:CLMB), is a value-added information technology distribution and solutions company that focuses on emerging and innovative technologies. Its distinct value proposition, YOY 15.66% revenue growth in 2023, and diverse products provide it a position among hedge fund managers despite the volatility of emerging technologies and competition. The company projected a growth rate of 14.70% for the upcoming year.
Headwaters Capital Management stated the following regarding Climb Global Solutions, Inc. (NASDAQ:CLMB) in its first quarter 2024 investor letter:
“Climb Global Solutions, Inc. (NASDAQ:CLMB): The Middle Man for the Middle Man Summary Investment: Thesis 1) Niche Cybersecurity and Data Center Software Distributor with Vertical Specific Expertise 2) Focus on Cybersecurity and Data Center End Markets along with Faster Growing Vendors Supports Double Digit Organic Billings Growth; Programmatic M&A Will Supplement Organic Growth 3) Attractive Financial Profile Given Capital Light Nature of Software Distribution and Minimal CAPEX Requirements 4) CEO with Impressive Industry Experience and Track Record.
Climb Global Solutions is a specialty IT distributor focused on cybersecurity and data center software. CLMB differentiates itself from broadline distributors such as Arrow, TD Synnex or Ingram Micro through deep expertise with the limited number of products it distributes. CEO Dale Foster orchestrated this focused distribution strategy when he took over as CEO, reducing the number of vendors on the company’s line card from 455 to 100. As a result, CLMB now serves as a more focused partner, dedicating all its sales and marketing expertise to a smaller list of vendors. CLMB acts as an outsourced sales force for its partners given their expertise with the products they distribute. Unlike many technology distributors, hardware only accounts for 6% of the company’s adjusted gross billings, which has positive working capital and ROIC implications (discussed below). While the top 20 vendors account for ~70% of CLMB’s sales, the company has a focused strategy of adding smaller companies with strong growth prospects to its line card. CLMB’s vendor expansion strategy is achieved through organic new partnership agreements as well as through acquisitions of distributors with high growth vendor relationships….” (Click here to read the full text)
2. Ferrari N.V. (NYSE:RACE)
2024 performance: 21.54%
Number of hedge fund holdings: 34
Established in 1942, Ferrari N.V. (NYSE:RACE) designs, engineering, produces and sells luxury performance sports cars globally. During the last 52 weeks, the stock price of Ferrari N.V. (NYSE:RACE) has increased by 48.02%. Analysts strongly recommend a buy rating for the stock due to its pricing and earnings power over time. The company delivered a YOY growth rate of 17.17% in 2023 and the estimated growth rate for the current year is 12.50%.
Ensemble Capital Management stated the following regarding Ferrari N.V. (NYSE:RACE) in its first quarter 2024 investor letter:
“Ferrari N.V. (NYSE:RACE): With the company’s utility vehicle, the Purosangue, sold out despite being priced much more aggressively than many investors expected, investor attention has been turning to the company’s long term ability to raise prices. With the business’s earnings power being regularly revised higher by investors who watched the company navigate COVID and inflation easily, the stock has been on a tear.
Ferrari has had a very successful run since we first bought shares in the company in 2017. It has been one of our most successful investments since, with shares rising over five times, and understandably so given how phenomenal this business is and how well it has been managed.
Initially spun out of Fiat (now Stellantis) in 2015, it was a rare jewel within the parent company, where its value was hidden among more standard and premium cars sold under brands such as Fiat, Alpha Romeo, Maserati, Chrysler, Jeep, and others. Under the leadership of the astute business manager Sergio Marchionne, who had run Fiat since 2004, Ferrari came to be recognized as the undervalued and unique asset that it was within its parent…” (Click here to read the full text)
1. Laird Superfood, Inc. (AMEX:LSF)
2024 Performance:140.6%
Number of hedge fund holdings: 2
Headquartered in Boulder, Colorado, Laird Superfood, Inc. (AMEX:LSF) is a plant-based superfood products manufacturer. The recent purchase of company shares by board member Geoffrey T. Barker of Laird Superfood, Inc. (AMEX:LSF) has strengthened investor confidence in the firm’s long-term growth prospects. As of 19 April 2024, Laird Superfood, Inc. (AMEX:LSF) stock closed at $2.25 per share and it has a market capitalization of $21.552 million.
Leaven Partners stated the following regarding Laird Superfood, Inc. (AMEX:LSF) in its first quarter 2024 investor letter:
“Our largest positive contributor to overall fund performance in the quarter came from one of our few American holdings, Laird Superfood Inc. Based in Sisters, Oregon, the eponymous Laird Superfood, Inc. (AMEX:LSF) was launched in 2015 by the big wave surfer, Laird Hamilton. The company started off producing and selling plant-based creamers for coffee and tea but has since expanded into other areas, such as snack foods and enhanced beverage probiotics and supplements. Taking advantage of the public markets’ appetite for plant-based health foods and following in the lucrative footsteps of similarly positioned companies, like Beyond Meat, Laird Superfood, in September 2020, went public on the NYSE raising an impressive $63 million for the company coffers with a market valuation of $265 million. Before the end of 2020, the company would trade even higher on the back of the surging interest of hot IPOs, but as popular interest in these products waned and the IPO market cooled, the market value of LSF began its perpetual decline for the next 18 months until it caught my attention in June 2022.
By June 2022, the market valuation of Laird Superfood (LSF) had declined impressively resulting in a new valuation below $20 million—which also somehow accounted for their $12 million purchase, (in cash and stock), of Picky Bars, in 2021. Launched in 2010, Picky Bars, specializing in clean-label products, is a provider of energy bars and nutritionally enhanced oatmeal and granola…” (Click here to read the full text)
Disclosure: None. You can also take a look at the 10 Best Multibagger Stocks to Buy Now and Top 15 Cities Where Gen Z is Moving in the US.
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