What Makes Ferguson (FERG) a Compelling Opportunity?

ClearBridge Investments, an investment management firm, released its first-quarter 2024 “Mid Cap Strategy” investor letter. A copy of the same can be downloaded here. Large-cap AI beneficiaries led markets in the first quarter, with the Russell 1000 Index returning 10.30%. Meanwhile, midcaps saw a boost from a wider market, with the Russell Midcap Index gaining 8.60%. The Strategy underperformed its Russell Midcap Index benchmark in the first quarter. The strategy gained across nine of the 11 sectors in which it was invested, on an absolute basis. Industrials and financials sectors were the leading contributors while consumer discretionary and IT sectors detracted. Overall stock selection and sector allocation effects detracted from performance on a relative basis. In addition, please check the fund’s top five holdings to know its best picks in 2024.

ClearBridge Mid Cap Strategy highlighted stocks like Ferguson plc (NYSE:FERG), in the first quarter 2024 investor letter. Ferguson plc (NYSE:FERG) is a plumbing and heating products distributor. The one-month return of Ferguson plc (NYSE:FERG) was -6.94%, and its shares gained 22.31% of their value over the last 52 weeks. On June 26, 2024, Ferguson plc (NYSE:FERG) stock closed at $190.98 per share with a market capitalization of $38.518 billion.

ClearBridge Mid Cap Strategy stated the following regarding Ferguson plc (NYSE:FERG) in its first quarter 2024 investor letter:

"We also added a new position in Ferguson plc (NYSE:FERG), a leading distributor of plumbing supplies and other products to plumbing and mechanical contractors, in the industrials sector. The company commands the largest market share in the industry, and primarily competes against small and localized competitors, creating a compelling opportunity for growth through a combination of market share gains and accretive acquisitions. We believe the company is uniquely positioned to win opportunities on nonresidential "mega" projects, as well as participate in any potential rebound in residential construction."

A busy warehouse stocked with a variety of industrial plumbing parts.

Ferguson plc (NYSE:FERG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 55 hedge fund portfolios held Ferguson plc (NYSE:FERG) at the end of the first quarter which was 57 in the previous quarter. Ferguson plc (NYSE:FERG) saw a 2.4% increase in revenue for the quarter despite a 2% continuous deflation. While we acknowledge the potential of Ferguson plc (NYSE:FERG) 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.

We discussed Ferguson plc (NYSE:FERG) in another article and shared the list of stocks hedge funds were pitching in their 2023 Q3 investor letters. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.