04. Core & Main, Inc. (NYSE:CNM)
Number of Hedge Fund Holders: 44
Core & Main, Inc. (NYSE:CNM) is a key player in the industrial distribution space, primarily focused on water, wastewater, storm drainage, and fire protection products. As an industrial distribution stock, Core & Main, Inc. (NYSE:CNM) serves a wide range of municipalities, private water companies, and professional contractors across the U.S., making it a crucial part of infrastructure maintenance and development. With a client base spanning 60,000 customers and 350 branches, the company’s extensive footprint and diverse product portfolio position it as a strong candidate for investors looking to tap into the industrial distribution sector. However, it’s important to note that the number of hedge funds holding Core & Main, Inc. (NYSE:CNM) decreased to 44 in Q2 2024 from 55 in the previous quarter, signaling some retraction in institutional interest.
Despite missing earnings expectations in Q2 2024, reporting an EPS of $0.67 compared to the expected $0.74, Core & Main, Inc. (NYSE:CNM) still shows strong fundamentals that could make it a lucrative stock. The company continues to benefit from its strategic acquisitions, which have contributed to its top-line growth, including expanding its operations into Canada through the acquisition of HM Pipe Products. This new market opportunity adds around $5 billion in addressable market potential.
Core & Main, Inc. (NYSE:CNM) financial health also remains robust, with solid gross margins in Q2, driven by private label performance and synergies from its M&A activities. The company’s net sales increased, supported by a 48% rise in meter sales, a growing segment that underscores the firm’s capacity to innovate and meet evolving infrastructure demands.
The ongoing need for infrastructure modernization in the U.S., particularly in water systems, provides long-term growth potential for Core & Main, Inc. (NYSE:CNM). Its position as a leader in providing products that address water scarcity, quality, and infrastructure failures further solidifies its relevance in the market. With a fragmented $39 billion addressable market, the company has room to capture more market share and continue scaling its operations through organic growth and acquisitions. Overall, Core & Main, Inc. (NYSE:CNM) diversified product portfolio, growth through acquisitions, and focus on infrastructure modernization make it a compelling industrial distribution stock for long-term investors.
Polen U.S. Small Company Growth Strategy stated the following regarding Core & Main, Inc. (NYSE:CNM) in its first quarter 2024 investor letter:
“The top contributors to the Portfolio’s quarterly performance, both relative and absolute, were Wingstop, Core & Main, Inc. (NYSE:CNM), and AppFolio. Core & Main is an industrial distributor specializing in waterworks and fire protection, providing an extensive range of over 200,000 products in the water infrastructure market. The company’s fundamental business performance has been better than expected, and it continues to execute its disciplined M&A strategy very well. We view Core & Main as a high-quality business with numerous competitive advantages and reinvestment opportunities, supported by structural tailwinds given the need to repair and replace aging municipal water infrastructure.”
