Is Construction Partners (ROAD) A Smart Long-Term Buy?

Conestoga Capital Advisors, a boutique, independent investment management firm, published its fourth-quarter 2020 ‘Small Cap Growth & SMid Cap Growth’ Investor Letter – a copy of which can be downloaded here. A net return of 31% was recorded by Conestoga’s Small Cap Growth fund and 19.72% return by its SMid Cap Growth Fund for the the end year 2020. Both performed below their Russell 2000 Growth and Russell 2500 Growth benchmarks that delivered a 34.63% and 25.89% return respectively. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Conestoga Capital Advisors, in their Q4 2020 investor letter, emphasized that Construction Partners, Inc. (NASDAQ: ROAD) is among their SMid Cap Growth Fund’s top 5 leaders. Construction Partners, Inc. is an Alabama-based company that offers public and private infrastructure projects. It currently has a $1.5 billion market capitalization. Since the beginning of the year, ROAD is up 0.52%, decently extending its 12-month gains to 101.38%. As of March 5, the stock closed at $28.71 per share.

Here is what Conestoga Capital Advisors has to say about Construction Partners, Inc. in their Q4 2020 investor letter:

“ROAD had a busy fourth quarter, making four acquisitions in North Carolina that added 13 hot-mixed asphalt (HMA) plants to their existing base of 35. This greater than 35% boost in HMA capacity adds nicely to rebounding organic growth as states and municipalities have remained committed to infrastructure maintenance work as the pandemic has unfolded. ROAD also reported third quarter results and issued 2021 guidance ahead of analyst expectations, with organic growth accelerating to 12% next year.”

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Our calculations show that Construction Partners, Inc. (NASDAQ: ROAD) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020,Construction Partners, Inc. was in 9 hedge fund portfolios compared to 11 funds in the third quarter. ROAD delivered a 4.92% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.