Conestoga Capital Advisors, an asset management company, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. At its September meeting, the Federal Reserve lowered the Federal Funds rate by 50 basis points due to weaker employment growth and moderate inflation. Equity markets welcomed the news, raising optimism for a soft landing in the U.S. economy. On September 26th, the S&P 500 Index achieved a record high, the Russell 2000 Index also moved higher over the quarter but remains roughly 10% below its all-time high. The Conestoga Small Cap Composite surged 10.09% (net) in the third quarter outperforming the Russell 2000 Growth Index’s 8.41% return. The Conestoga SMid Cap Composite returned 12.94% (net) versus the Russell 2500 Growth Index’s 6.99% return. The Conestoga Micro Cap Composite advanced 7.60% (net) but trailed the Russell Microcap Growth Index’s return of 8.57%. Finally, the Conestoga Mid Cap Composite returned 8.36% (net) outperforming the Russell Midcap Growth Index’s 6.54%. 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 Fortinet, Inc. (NASDAQ:FTNT), in the third quarter 2024 investor letter. Fortinet, Inc. (NASDAQ:FTNT) is a global provider of cybersecurity and convergence of networking and security solutions. The one-month return of Fortinet, Inc. (NASDAQ:FTNT) was 7.61%, and its shares gained 47.37% of their value over the last 52 weeks. On October 22, 2024, Fortinet, Inc. (NASDAQ:FTNT) stock closed at $82.44 per share with a market capitalization of $63.059 billion.

Conestoga Capital Advisors stated the following regarding Fortinet, Inc. (NASDAQ:FTNT) in its Q3 2024 investor letter:

"Fortinet, Inc. (NASDAQ:FTNT) is the worldwide market share leader in network security firewalls (by units). During the quarter, FTNT reported a significant beat on billings and saw accelerating bookings growth, indicating the firewall product cycle may have turned positive. The company is also managing inventory well, and operating margins surprised to the upside in the reported quarter. FTNT maintains a healthy outlook for highly profitable growth."

A close-up of a user authenticating into a secure network using a two-factor authentication process.

Fortinet, Inc. (NASDAQ:FTNT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Fortinet, Inc. (NASDAQ:FTNT) at the end of the second quarter which was 44 in the previous quarter. While we acknowledge the potential of Fortinet, Inc. (NASDAQ:FTNT) 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.