Is SPS Commerce (SPSC) 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 SPS Commerce, Inc. (NASDAQ: SPSC) is among their Small Cap Growth Fund’s top 5 leaders. SPS Commerce, Inc. is a Minneapolis, Minnesota-based software company that provides cloud-based software solutions to companies and individuals. It currently has a $3.7 billion market capitalization. Since the beginning of the year, SPSC is down -4.88%, but its 12-month gains are up 96.26%. As of March 5, the stock closed at $103.29 per share.

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

“SPSC’s market position as a leader in software automation for e-commerce retailers and suppliers has been favorable as the pandemic has shifted even more purchases online. Supply chain disruptions during COVID-19 have forced more companies to automate and share information with their counterparties. SPSC also announced the acquisition of Data Masons, a solution that adds 450 new customers and solidifies their product integration with Microsoft’s cloud CRM and ERP applications.”

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Our calculations show that SPS Commerce, Inc. (NASDAQ: SPSC) 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, SPS Commerce, Inc. (NASDAQ: SPSC) was in 14 funds. SPSC delivered a 4.22% 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.