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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 RBC Bearings Incorporated (NYSE:RBC). Headquartered in Oxford, Connecticut, RBC Bearings Incorporated (NYSE:RBC) manufactures engineered precision bearings and components. The one-month return of RBC Bearings Incorporated (NYSE:RBC) was 0.93%, and its shares gained 31.59% of their value over the last 52 weeks. On April 28, 2025, RBC Bearings Incorporated (NYSE:RBC) stock closed at $324.75 per share with a market capitalization of $10.212 billion.
Conestoga Capital Advisors stated the following regarding RBC Bearings Incorporated (NYSE:RBC) in its Q1 2025 investor letter:
"RBC Bearings Incorporated (NYSE:RBC) is a manufacturer and marketer of highly engineered precision bearings that are sold in the Industrial (70% of Revenue) and the Aerospace markets (30% of Revenue). RBC’s quarterly results and guidance were better than expected with an impressive gross margin performance as the company continued to achieve synergies from its Dodge acquisition. Visibility is improving for RBC due to the aerospace cycle and improvement in the industrial market (infrastructure bill)."
A skilled machinist inspecting a precision bearing for a aerospace/defense application.
RBC Bearings Incorporated (NYSE:RBC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held RBC Bearings Incorporated (NYSE:RBC) at the end of the fourth quarter which was 26 in the previous quarter. In the third quarter of financial year 2025, RBC Bearings Incorporated (NYSE:RBC) reported $394 million in net sales, representing a 5.5% increase over last year. While we acknowledge the potential of RBC Bearings Incorporated (NYSE:RBC) 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.