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Conestoga Capital Advisors, an asset management company, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets started the year with a rally due to optimism about a strong economy and expectations of moderating inflation and lower interest rates. However, concerns over slowing earnings from major Technology companies, geopolitical tensions, and an upcoming announcement on tariffs led to a sharp decline in equities by the end of the first quarter. Investors sought safety, driving U.S. Treasury yields down. The Conestoga Small Cap Composite returned -11.35% (net) in the first quarter compared to the Russell 2000 Growth Index’s -11.12% return. The Conestoga SMid Cap Composite returned -5.73% compared to the Russell 2500 Growth Index’s -10.80% return. The Conestoga Micro-Cap Composite returned -8.24% vs the Russell Microcap Growth Index’s return of -17.75%. Finally, the Conestoga Mid Cap Composite returned 0.96% (net), compared to the Russell Midcap Growth Index’s -7.12% return. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.
In its first-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as Montrose Environmental Group, Inc. (NYSE:MEG). Montrose Environmental Group, Inc. (NYSE:MEG) is an environmental services company. One-month return of Montrose Environmental Group, Inc. (NYSE:MEG) was 12.43%, and its shares lost 64.52% of their value over the last 52 weeks. On April 29, 2025, Montrose Environmental Group, Inc. (NYSE:MEG) stock closed at $15.29 per share with a market capitalization of $530.006 million.
Conestoga Capital Advisors stated the following regarding Montrose Environmental Group, Inc. (NYSE:MEG) in its Q1 2025 investor letter:
"Montrose Environmental Group, Inc. (NYSE:MEG) is a pure play environmental services company that offers end-to-end solutions for addressing environmental issues. Despite reporting a strong quarter and outlook which caused the stock to surge over 30% in late February, the stock remains under sustained pressure. Despite generating 80% of revenue from corporate customers, the business may be challenged, and growth prospects may be diminished under the new Administration as the Environmental Protection Agency (EPA) looks to roll back environmental regulations."
A biohazard waste disposal team safely transferring contaminated water for treatment.
Montrose Environmental Group, Inc. (NYSE:MEG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Montrose Environmental Group, Inc. (NYSE:MEG) at the end of the fourth quarter, compared to 18 in the third quarter. Montrose Environmental Group, Inc.'s (NYSE:MEG) fourth quarter revenue increased to a record $189.1 million; a 14.1% increase from comparable quarter. While we acknowledge the potential of Montrose Environmental Group, Inc. (NYSE:MEG) 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.