Hidden Gems: Unveiling the 5 Stocks on Hedge Funds’ Radar

4. Xylem Inc. (NYSE:XYL)

2024 Performance: 20%

Number of hedge fund holdings in Q4:32

Founded in 2011, Xylem Inc. (NYSE:XYL) specializes in the design, manufacture, and servicing of engineered products and solutions. Investment management companies view Xylem Inc. (NYSE:XYL) as a potentially profitable opportunity. Artisan Mid Cap Fund discussed Xylem Inc. (NYSE:XYL) in its Q4 2023  letter, as it added a small position to its portfolio. However, due to its increased profitability Xylem Inc. (NYSE:XYL) has now been increased to a fully weighted investment in the recent quarter. Xylem Inc. (NYSE:XYL) is a leading company in the water treatment business and has reported 28.59% year-on-year revenue growth in 2023, with an estimated growth of 10.80% for the current year. Recent share price appreciation and long-term growth potential make Xylem Inc. (NYSE:XYL) a lucrative investment.

Artisan Mid Cap Fund stated the following regarding Xylem Inc. (NYSE:XYL) in its first quarter 2024 investor letter:

“Notable adds in the quarter included Xylem Inc. (NYSE:XYL), NVR and Equifax. Xylem is a global leader in water technology across pumps, smart meters and treatment services. More than 80% of the company’s sales come from markets where it maintains the No. 1 or No. 2 market position. Xylem’s pumps business (sold primarily to utilities) is sticky and profitable, providing capital to invest in innovative solutions, such as smart meters. In mid-2023, Xylem completed the acquisition of Evoqua, giving it a leading position in the US water treatment business. We believe the company is at the start of a compelling profit cycle. Smart meter sales are recovering from supply chain issues, cost and revenue synergies from its acquisition are in the early innings, and a newly hired and well-respected CFO should help catalyze long-awaited margin expansion. Meanwhile, rising demand for solutions to water sustainability challenges should be a trend for years to come. Financial results were thesis affirming, including revenue, margins and earnings that exceeded expectations. We decided to bring the position into the CropSM of the portfolio.”