Palm Valley Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of 0.79% for the quarter, outperforming its benchmark, the S&P Small Cap 600 Index which returned -32.65% in the same quarter. You should check out Palm Valley Capital’s top 5 stock picks which helped them beat the market by nearly 33 percentage points. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Palm Valley Capital highlighted a few stocks and Unifirst Corp (NYSE:UNF) is one of them. UniFirst is a uniform rental company. Year-to-date, UNF stock lost 16.7% and on May 19th it had a closing price of $166.02. Here is what Palm Valley Capital said:
“Unifirst (UNF) is a market leading provider of workplace uniforms and protective clothing in the United States. Founded in 1950, UniFirst has a long history of generating free cash flow and maintaining a very strong balance sheet. As of December 31, 2019, the company had $18.70/share in cash and no debt. We used the market’s carnage as an opportunity to buy UniFirst at a discount to our calculated valuation.”
In Q4 2019, the number of bullish hedge fund positions on UNF stock decreased by about 13% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with UNF’s growth potential.
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Disclosure: None. This article is originally published at Insider Monkey.