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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 HEICO Corporation (NYSE:HEI-A). HEICO Corporation (NYSE:HEI-A) engages in the design and manufacturing of aerospace, defense, and electronic-related products and services. The one-month return of HEICO Corporation (NYSE:HEI-A) was -6.44%, and its shares gained 19.86% of their value over the last 52 weeks. On April 28, 2025, HEICO Corporation (NYSE:HEI-A) stock closed at $197.85 per share with a market capitalization of $30.36 billion.
Conestoga Capital Advisors stated the following regarding HEICO Corporation (NYSE:HEI-A) in its Q1 2025 investor letter:
"HEICO Corporation (NYSE:HEI-A): A commercial and military aircraft aftermarket parts company which designs, manufactures, repairs and distributes jet engines and aircraft component replacement parts. The company benefitted from solid travel growth as well as healthy parts and maintenance spending due to the delayed retirement of older aircraft given production issues at Boeing (BA). More recently the company believes, under the new administration, it has an opportunity to sell its aircraft replacement parts to the Department of Defense (DOD)."
A fighter jet in formation, revealing the prowess of the companies defense arm.
HEICO Corporation (NYSE:HEI-A) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held HEICO Corporation (NYSE:HEI-A) at the end of the fourth quarter which was 57 in the previous quarter. While we acknowledge the potential of HEICO Corporation (NYSE:HEI-A) 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.