What Makes Comfort Systems USA (FIX) an Investment Bet?

Polen Capital, an investment management company, released its “Polen US SMID Company Growth Strategy” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. The initial market optimism after the Presidential election gave way to fear and uncertainty in the first quarter of 2025. Against this backdrop, the fund returned -12.38% gross, and -12.65% net of fees compared to the Russell 2500 Growth Index return of -10.80%. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its first-quarter 2025 investor letter, Polen US SMID Company Growth Strategy highlighted stocks such as Comfort Systems USA, Inc. (NYSE:FIX). Comfort Systems USA, Inc. (NYSE:FIX) offers mechanical and electrical installation, renovation, maintenance, repair, and replacement services for the mechanical and electrical services. The one-month return of Comfort Systems USA, Inc. (NYSE:FIX) was 17.39%, and its shares gained 67.53% of their value over the last 52 weeks.  On June 6, 2025, Comfort Systems USA, Inc. (NYSE:FIX) stock closed at $510.52 per share, with a market capitalization of $18.01 billion.

Polen US SMID Company Growth Strategy stated the following regarding Comfort Systems USA, Inc. (NYSE:FIX) in its Q1 2025 investor letter:

“During the quarter, we added five new positions in SAIA, Construction Partners, Comfort Systems USA, Inc. (NYSE:FIX), Wingstop, and Manhattan Associates. We also added to several existing positions.

Comfort Systems is a leading mechanical, electrical, and plumbing installation and service provider. The company is a diversified provider of new building systems for new construction, replacements, and updates for existing buildings. Comfort Systems primarily focus on commercial, industrial, healthcare, and public infrastructure markets. Building systems construction is an inherently challenging business, but Comfort Systems is highly differentiated for its execution and long track record for acquisitions as it consolidates a highly fragmented industry. As a result, Comfort Systems earns over 30% free cash flow return on invested capital, and we expect the company to grow earnings at about a mid-teens rate. The company has some exposure to data centers. We took advantage of the volatility around the data center and GenAl sentiment to initiate our position.”

Was Jim Cramer Right About Comfort Systems USA, Inc. (FIX)?

An engineer inspecting a newly renovated electrical installation.

Comfort Systems USA, Inc. (NYSE:FIX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held Comfort Systems USA, Inc. (NYSE:FIX) at the end of the first quarter, which was 50 in the previous quarter. In the first quarter, Comfort Systems USA, Inc. (NYSE:FIX) reported revenue of $1.8 billion, an increase of 19% from Q1 2024. While we acknowledge the potential of Comfort Systems USA, Inc. (NYSE:FIX) 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 Comfort Systems USA, Inc. (NYSE:FIX) and shared the list of small-cap construction and materials stocks hedge funds are buying. In addition, please check out our hedge fund investor letters Q1 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.