Does UL Solutions (ULS) Have an Attractive Margin and Free Cash Flow?
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 UL Solutions Inc. (NYSE:ULS) in the second quarter 2024 investor letter. UL Solutions Inc. (NYSE:ULS) offers safety science services worldwide. The one-month return of UL Solutions Inc. (NYSE:ULS) was 15.41%, and its shares gained 38.44% of their value over the last three months. On August 13, 2024, UL Solutions Inc. (NYSE:ULS) stock closed at $51.46 per share with a market capitalization of $10.292 billion.
Conestoga Capital Advisors stated the following regarding UL Solutions Inc. (NYSE:ULS) in its Q2 2024 investor letter:
"UL Solutions Inc. (NYSE:ULS): Based in Northbrook, IL, UL Solutions is a leading global business services company focused on independent testing, inspection and certification. For Conestoga, ULS is one of the very few initial public offerings we have participated in but the strong brand recognition, strong business model and operating history made it a fit for the Conestoga small cap portfolio. The company has historically grown revenues between 6%-8%, and we believe ULS has attractive margins and free cash flow."
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UL Solutions Inc. (NYSE:ULS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. While we acknowledge the potential of UL Solutions Inc. (NYSE:ULS) 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 addition, please check out our hedge fund investor letters Q2 2024 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.