What Makes Badger Meter (BMI) an Investment Opportunity?

Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The Small Company Fund fared worse compared to its benchmark in the first quarter and declined 16.03% vs 11.12% decline for the Russell 2000® Growth index. The underperformance in the quarter was led by negative investor sentiment due to geopolitical shocks or the sudden deterioration of the macroeconomic outlook. In addition, check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, The Brown Capital Management Small Company Fund highlighted stocks such as Badger Meter, Inc. (NYSE:BMI). Badger Meter, Inc. (NYSE:BMI) offers utility water smart metering solutions and software technologies to the municipal water utilities market. The one-month return of Badger Meter, Inc. (NYSE:BMI) was 5.26%, and its shares gained 33.26% of their value over the last 52 weeks.  On June 9, 2025, Badger Meter, Inc. (NYSE:BMI) stock closed at $247.83 per share, with a market capitalization of $7.299 billion.

The Brown Capital Management Small Company Fund stated the following regarding Badger Meter, Inc. (NYSE:BMI) in its Q1 2025 investor letter:

“In the first quarter of 2025, we added three companies, Badger Meter, Inc. (NYSE:BMI), Red Violet (RDVT) and TransMedics (TMDX). Badger Meter makes water meters and other devices primarily for water utilities to measure usage by its customers and to monitor conditions across its system. In an industry that has historically grown in the single digits, Badger Meter has generated a revenue compound annual growth rate of 14% over the last five years. The company has achieved this growth rate primarily by 1) adding layers of technology on top of traditional monitoring systems and 2) by improving the accuracy and capabilities of its advanced meters which are replacing aging conventional meters in water system infrastructure. Badger’s technology advancements include optimizing the transmission of usage data from meters and using sensors to monitor water pressure across the system, to detect leaks and to perform in-line testing of water quality. All of this data flows into Badger’s robust analytics software platform, which allows water-utility customers to have better visibility across their entire system and make better decisions. The company has a strong balance sheet with $295 million in cash and no debt and has been profitable for many years. With $827 million in revenue in 2024, we believe Badger Meter has a long runway for growth as it sells into a total addressable market which we estimate to be around $20 billion and growing.”

Badger Meter, Inc. (BMI): Among the Low Profile Dividend Champions to Buy

An engineer overseeing the calibrations of a sophisticated flow meter.

Badger Meter, Inc. (NYSE:BMI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Badger Meter, Inc. (NYSE:BMI) at the end of the first quarter, which was 47 in the previous quarter. Badger Meter, Inc.’s (NYSE:BMI) total sales grew 13% year over year in the first quarter of 2025. While we acknowledge the potential of Badger Meter, Inc. (NYSE:BMI) 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 undervalued AI stock set for massive gains.

In another article, we covered Badger Meter, Inc. (NYSE:BMI) and shared the list of best dividend champions to buy. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

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