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We came across a bullish thesis on QXO, Inc. (QXO) on Value Investing Subreddit Page by Frankxdxdxd. In this article, we will summarize the bulls’ thesis on QXO. QXO, Inc. (QXO)'s share was trading at $12.46 as of April 23rd.
A construction site with workers wearing hard hats and safety vests, installing roofing materials.
QXO, led by renowned serial entrepreneur Brad Jacobs, is embarking on a bold plan to transform the $800 billion U.S. and Western European building products distribution industry by leveraging technology and consolidation. Jacobs, who has a long history of building multibagger companies like XPO, GXO, RXO, United Rentals, and United Waste Systems (now Waste Management), is applying his proven M&A-driven playbook to one of the largest and most fragmented industries. With only 50% of the market held by major players and over 20,000 small businesses, the industry offers an immense acquisition runway. QXO is targeting $50 billion in annual revenue over the next decade—equivalent to just 6% market share—through a combination of organic growth and highly accretive acquisitions. Jacobs has personally committed $900 million to QXO, aligning his interests with shareholders, and is known for incentivizing his executive teams with equity tied to total shareholder return.
Jacobs sees a compelling long-term opportunity in this sector driven by several secular tailwinds. The industry has delivered 7% annual growth over the past five years, underpinned by largely non-discretionary demand. Repairs to aging residential, commercial, and infrastructure properties cannot be deferred—if a roof leaks, it must be fixed. U.S. homes now average 42 years old, commercial buildings over 50 years, and infrastructure like roads and bridges exceed 70 years, setting the stage for sustained investment. In fact, the U.S. government is expected to allocate up to $2 trillion toward infrastructure renewal in the coming decade. This sets up a favorable macro backdrop for QXO’s growth strategy.
Technology adoption in this sector remains nascent, creating a major value creation lever. Few distributors are tech-enabled, and many lag in e-commerce, inventory optimization, logistics, and automation. Jacobs aims to address these inefficiencies through digital platforms, AI-powered pricing, and automated distribution centers—initiatives that drive margin expansion and free cash flow conversion. After the initial technology and automation CapEx, the business becomes low CapEx-intensive, allowing for high EBITDA-to-FCF conversion.