KBR’s (KBR) Four-Year Plan Paid Off in Q2

Investment management company Cove Street Capital recently released its “Small Cap Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund returned -10.77% (net of fees) compared to -3.28% for the Russell 2000 Index and -3.64% for the Russell 2000 Value Index. For the first half of 2024, the S&P 500 is up 15%. Its biggest component, Nvidia, has increased by 150% over that time. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Cove Street Capital Small Cap Value Fund highlighted stocks like KBR, Inc. (NYSE:KBR), in the second quarter 2024 investor letter. KBR, Inc. (NYSE:KBR) offers scientific, technology, and engineering solutions to governments and commercial customers. The one-month return of KBR, Inc. (NYSE:KBR) was -2.02%, and its shares lost 2.26% of their value over the last 52 weeks. On July 9, 2024, KBR, Inc. (NYSE:KBR) stock closed at $62.54 per share with a market capitalization of $8.458 billion.

Cove Street Capital Small Cap Value Fund stated the following regarding KBR, Inc. (NYSE:KBR) in its Q2 2024 investor letter:

“On the plus side, KBR, Inc. (NYSE:KBR) has been a strong performer so far YTD on the back of an investor day in the second quarter that highlighted the success of the last four-year plan (2020-2023) before laying out ambitious but credible targets for the next 4 years (2024- 2027). Since 2020, KBR has pivoted their commercial business away from high-risk EPC projects to a more differentiated IP-first consulting approach that now sees 20% EBIT margins and contributes 40% of their overall profitability. KBR has cleaned up their balance sheet by settling convertible notes and warrants and now sits at a healthy 2x net leverage. With the upcoming ramp of a $20B government services contract with the U.S. army, the company is well positioned to generate cash and return value to shareholders.”

An engineer wearing protective gear overlooking a research and development laboratory.

KBR, Inc. (NYSE:KBR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held KBR, Inc. (NYSE:KBR) at the end of the first quarter which was 47 in the previous quarter. Consolidated revenues of KBR, Inc. (NYSE:KBR) in the first quarter were $1.8 billion, representing a 7% year-on-year increase. While we acknowledge the potential of KBR, Inc. (NYSE:KBR) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We discussed KBR, Inc. (NYSE:KBR) in another article and shared billionaire Stanley Druckenmiller’s top stocks picks. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

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