When a caller asked what was going on with QXO, Inc. (NYSE:QXO) and its CEO Brad Jacobs during the lightning round on August 26, Mad Money host Jim Cramer stated:
Okay, first of all, I think you should buy it. I’m just going to say that point blank. I mean, he’s putting together a conglomerate for building products, mostly roofing, at a time when people hate building products. But what happens when the Fed finally has to cut rates because housing’s so bad, which I think can happen? Well, I’ll tell you what happens. That stock goes from $14 to $24. That’s why I think you should own it.
That view builds on Cramer’s earlier comments. In April, he said Jacobs was “a winner” and predicted QXO could move from $20 to $30 when rates decline. In January, he called the stock a buy because “it’s Brad Jacobs.”
QXO’s Latest Earnings Show the Scale of Its Growth
QXO, Inc.’s (NYSE:QXO) second-quarter results highlight the rapid expansion of its business, although the company remains unprofitable on a GAAP basis. Second-quarter net sales were $3.246 billion, up from $1.906 billion a year earlier, while adjusted EBITDA increased to $272 million from $204 million. The company still reported a net loss of $55 million. The second-quarter results do not include the contribution from TopBuild, which the company acquired on July 1 in a transaction valued at approximately $17 billion. Management expects the combined company to more than double EBITDA by 2030 and reach $50 billion in revenue within the decade.
Integration and Debt Could Test QXO’s Growth Plan
The challenge is that QXO, Inc. (NYSE:QXO) must now deliver on its long-term targets while integrating several major acquisitions, including TopBuild, which closed only on July 1. It paid approximately $17 billion for TopBuild, following its $11 billion acquisition of Beacon and $2.25 billion purchase of Kodiak. The TopBuild transaction also required significant financing and added execution risk at a time when housing demand remains under pressure. The deeper concern is that QXO remains unprofitable on a GAAP basis, while its acquisition-driven expansion has yet to translate into sustained positive free cash flow. Lower rates could help construction and housing demand, but QXO first has to prove that its enlarged platform can generate the cash flow needed to support the acquisition strategy.
Institutional Sentiment and Short Interest
Institutional positioning has nevertheless become more supportive. As per Insider Monkey’s data of more than 1,000 hedge funds, 83 hedge fund portfolios held QXO at the end of the second quarter, up from 65 in the previous quarter. Lastly, the short position stood at approximately 8.57% of the public float.
At $14.02 on August 26, Cramer’s call of $24 implies substantial upside. QXO, Inc.’s (NYSE:QXO) path to that level, however, depends on more than lower interest rates. The company needs to show that its acquisitions can translate into stronger cash generation, successful integration, and lower financial risk. If those improvements materialize alongside a recovery in housing, Cramer’s bullish case becomes easier to justify.
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