Strong Results Lifted Sensient Technologies Corporation (SXT) in Q2

Heartland Advisors, an investment management company, released its “Heartland Opportunistic Value Equity Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, investors’ sentiments shifted to a more optimistic tone as concerns about a recession were overblown. The strategy returned 0.65% in the quarter, compared to a 3.84% return for the Russell 3000® Value Index. Stock selection was negative in 7 of the 11 sectors, primarily driven by the Industrials and Financials sectors. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, Heartland Opportunistic Value Equity Strategy highlighted stocks such as Sensient Technologies Corporation (NYSE:SXT). Sensient Technologies Corporation (NYSE:SXT) is a global manufacturer and marketer of colors, flavors, and other specialty ingredients. The one-month return of Sensient Technologies Corporation (NYSE:SXT) was -14.75%, and its shares gained 21.36% of their value over the last 52 weeks. On September 25, 2025, Sensient Technologies Corporation (NYSE:SXT) stock closed at $96.72 per share, with a market capitalization of $4.107 billion.

Heartland Opportunistic Value Equity Strategy stated the following regarding Sensient Technologies Corporation (NYSE:SXT) in its second quarter 2025 investor letter:

“One of our biggest contributors among our small-cap holdings this quarter was Sensient Technologies Corporation (NYSE:SXT), a leading manufacturer of colors and flavors for the food and beverage industry. The company reported strong Q1 results, driven by solid revenue growth, especially in its natural color franchise.

On their recent earnings call, management described demand for Sensient’s natural colors as the largest opportunity in the company’s history. This demand has been fueled by changing consumer preferences and the recent push by Health and Human Services Secretary Robert F. Kennedy to eliminate synthetic food dyes from the nation’s food supply.

We first purchased shares of Sensient in Q4-23 when the company was trading for less than 12x EBITDA. The stock currently trades at more than 16x EBITDA, but with growth and margins accelerating due to demand for Sensient’s natural colors, we believe that 20x EBITDA is an achievable multiple near-term. That said, the risk-reward profile is far less compelling today.”

Sensient Technologies Corporation (NYSE:SXT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 25 hedge fund portfolios held Sensient Technologies Corporation (NYSE:SXT) at the end of the second quarter, compared to 28 in the previous quarter. Sensient Technologies Corporation’s (NYSE:SXT) revenue was $414.2 million in the second quarter of 2025 compared to $403.5 million in Q2 2024. While we acknowledge the risk and potential of Sensient Technologies Corporation (NYSE:SXT) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Sensient Technologies Corporation (NYSE:SXT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Sensient Technologies Corporation (NYSE:SXT) and shared a bullish thesis on the company. In addition, please check out our hedge fund investor letters Q2 2025 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.