What Makes CSW Industrials (CSWI) a Great Stock Despite a Boring Business?
Investment management company First Pacific Advisors recently released its 'FPA Queens Road Small Cap Value Fund' first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund returned -2.51% compared to a -7.74% return for the Russell 2000 Value Index. President Trump announced his tariffs on April 2nd, causing equity markets to decline sharply and increasing volatility. Additionally, you can check the fund's top 5 holdings to determine its best picks for 2025.
In its first-quarter 2025 investor letter, FPA Queens Road Small Cap Value Fund highlighted stocks such as CSW Industrials, Inc. (NASDAQ:CSWI). CSW Industrials, Inc. (NASDAQ:CSWI) is a diversified industrial company that operates through Contractor Solutions, Engineered Building Solutions, and Specialized Reliability Solutions segments. The one-month return of CSW Industrials, Inc. (NASDAQ:CSWI) was 0.05%, and its shares gained 22.92% of their value over the last 52 weeks. On May 21, 2025, CSW Industrials, Inc. (NASDAQ:CSWI) stock closed at $314.45 per share with a market capitalization of $5.277 billion
FPA Queens Road Small Cap Value Fund stated the following regarding CSW Industrials, Inc. (NASDAQ:CSWI) in its Q1 2025 investor letter:
"CSW Industrials, Inc. (NASDAQ:CSWI) sells HVAC and plumbing parts and accessories, mostly for professional tradespeople. This is one of those boring but surprisingly great businesses – margins are near 30% for what looks like a basic industrial company with low tech products. But CSW has scale and scope advantages across its product range, the products they sell are high value but low cost, and they benefit from a dynamic where the tradesperson chooses the product they are most familiar with but the end customer is the one who pays. CSW was a big beneficiary of Covid era inflation and stimulus. Despite fears of a slowdown, earnings in 2024 were exceptional. We have trimmed our position along the way as the stock price has increased."
Close-up of a specialized engineer team examining architectural railings.
CSW Industrials, Inc. (NASDAQ:CSWI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held CSW Industrials, Inc. (NASDAQ:CSWI) at the end of the fourth quarter which was 23 in the previous quarter. CSW Industrials, Inc. (NASDAQ:CSWI) reported revenue of $194 million in the fiscal third quarter of 2025, a $19 million or 11% increase when compared to the prior year period. While we acknowledge the potential of CSW Industrials, Inc. (NASDAQ:CSWI) 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 undervalued AI stock set for massive gains.
In another article, we covered CSW Industrials, Inc. (NASDAQ:CSWI) and shared FPA Queens Road Small Cap Value Fund's views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
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