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Is SPX Technologies (SPXC) a Durable Business?

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1 month ago

August 14, 2024

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Is SPX Technologies (SPXC) a Durable Business?

Conestoga Capital Advisors, an asset management company, released its “Small Cap Strategy” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. The second quarter of 2024 may be regarded as a time of moderation. Economic indicators largely reflected slowing growth and easing inflation. Equity markets are also driven by the moderation theme. Large-cap stocks, as measured by the S&P 500, rose 3.9% in the second quarter, however, small-cap stocks lagged again, with the Russell 2000 Index declining -3.3% and the Russell 2000 Growth Index declining -2.9%. Conestoga Small Cap Composite fell -5.59% in the second quarter compared to -2.92% for the Russell 2000 Growth Index. Stock selection was the major reason for the underperformance of the portfolio relative to the index. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2024.

Conestoga Capital Advisors highlighted stocks like SPX Technologies, Inc. (NYSE:SPXC) in the second quarter 2024 investor letter. SPX Technologies, Inc. (NYSE:SPXC) distributes infrastructure equipment for HVAC and detection and measurement markets. The one-month return of SPX Technologies, Inc. (NYSE:SPXC) was -2.16%, and its shares gained 85.99% of their value over the last 52 weeks. On August 13, 2024, SPX Technologies, Inc. (NYSE:SPXC) stock closed at $149.74 per share with a market capitalization of $6.932 billion.

Conestoga Capital Advisors stated the following regarding SPX Technologies, Inc. (NYSE:SPXC) in its Q2 2024 investor letter:

“SPX Technologies, Inc. (NYSE:SPXC): Based in Charlotte, NC, SPXC is a supplier of infrastructure equipment spanning two segments – heating ventilation and air conditioning (HVAC) and detection and measurement (D&M). Through acquisitions and divestitures, SPXC has transformed itself into a business focused on high margin, attractive growth niche solutions that are highly engineered, carry premium prices and command leading market positions through innovation and a large installed base. We view this as a durable business that can compound its growth through organic revenue, complementary acquisitions and consistent margin gains while maintaining a healthy balance sheet.”

An engineer adjusting a robotic arm in a factory line to control engineered air movement solutions.

SPX Technologies, Inc. (NYSE:SPXC) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held SPX Technologies, Inc. (NYSE:SPXC) at the end of the first quarter which was 14 in the previous quarter. In the second quarter, SPX Technologies, Inc.’s (NYSE:SPXC) revenue increased by 18.4% and adjusted EBITDA by 45% year-on-year. While we acknowledge the potential of SPX Technologies, Inc. (NYSE:SPXC) 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.

In another article, we discussed SPX Technologies, Inc. (NYSE:SPXC) and shared the list of industrial stocks already riding the AI wave. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

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