10 Best Conglomerate Stocks to Buy According to Hedge Funds

7) Compass Diversified (NYSE:CODI)

Number of Hedge Fund Holders: 12

Compass Diversified (NYSE:CODI) is a private equity firm specializing in add-on acquisitions, buyouts, industry consolidation, recapitalization, and late-stage, and middle-market investments.

Analysts at TD Cowen are optimistic about Compass Diversified (NYSE:CODI)’s long-term growth potential and the research firm believes that the company provides shareholders an opportunity to own a portfolio of actively managed businesses having compelling attributes. The firm believes that Compass Diversified (NYSE:CODI)’s advantages consist of diversification, flexibility to transact at optimal times, favorable cost of debt, and permanent equity capital.

Compass Diversified (NYSE:CODI) expects consolidated pro forma subsidiary adjusted EBITDA of between $510 million – $525 million. The increase in its full-year guidance will likely come from a rise in its branded consumer vertical, which should deliver adjusted EBITDA of between $390 million and $400 million. The company’s branded consumer businesses, which focus on acquiring and managing mid-market companies having strong consumer brands, are expected to support the next leg of growth.

Compass Diversified (NYSE:CODI)’s branded consumer businesses should be aided by a healthy portfolio of consumer-oriented brands, e-commerce expansion, and the economic resilience of premium brands. The company’s brands focus on evolving consumer preferences and sustainability. For instance, PrimaLoft continues to expand its use of recycled materials, aligning with the eco-conscious trends.

As per Wall Street, the shares of Compass Diversified (NYSE:CODI) have an average price target of $30.67.