02. WESCO International, Inc. (NYSE:WCC)
Number of Hedge Fund Holders: 51
WESCO International, Inc. (NYSE:WCC) is a key player in the industrial distribution sector providing business-to-business distribution, logistics services, and supply chain solutions across various segments, including electrical and electronic solutions, communications and security solutions, and utility and broadband services. As of Q2 2024, WESCO is held by 51 hedge funds, a slight increase from 50 in the previous quarter, reflecting strong institutional confidence.
Despite missing earnings expectations in Q2 2024, reporting an EPS of $3.21 compared to the expected $3.48, WESCO International, Inc. (NYSE:WCC) remains a solid investment based on its strong fundamentals. The company generated a record $500 million in free cash flow in the first half of the year and is on track to achieve its full-year cash flow target of $800 million to $1 billion. This impressive cash generation enabled WESCO International, Inc. (NYSE:WCC) to repurchase $300 million of its stock in Q2, demonstrating its commitment to returning value to shareholders.
WESCO International, Inc. (NYSE:WCC) acquisition of two software companies, entroCIM and Storeroom Logix, aligns with its digital transformation strategy, which aims to enhance operational efficiencies, unlock new cross-selling opportunities, and integrate future acquisitions more seamlessly. These strategic moves will likely contribute to the company’s long-term EBITDA margin expansion goals.
In Q2 2024, WESCO International, Inc. (NYSE:WCC) experienced strong growth in its data center business, with sales increasing by high teens year-over-year, driven by the rising demand for AI and GenAI applications. Although the utility segment faced challenges due to customer destocking and project delays, the overall backlog remains healthy, supporting expectations for sales growth in the second half of the year.
WESCO International, Inc. (NYSE:WCC) consistent outperformance relative to its peers in the industrial distribution space, along with its ability to leverage its scale and expand its service offerings, positions the company well for continued growth. With strong free cash flow, strategic acquisitions, and healthy sector exposure, WESCO International, Inc. (NYSE:WCC) is a top choice for investors looking for a stable and innovative industrial distribution stock.
Diamond Hill Mid Cap Strategy stated the following regarding WESCO International, Inc. (NYSE:WCC) in its Q2 2024 investor letter:
“Other bottom contributors included Parker-Hannifin, WESCO International, Inc. (NYSE:WCC) and Regal Rexnord. Shares of leading industrial distributor WESCO (WCC) and electric motors and power transmission components manufacturer Regal Rexnord (RRX) were pressured against a backdrop of macroeconomic concerns which are seemingly making investors hesitant to own leveraged cyclical companies like WCC and RRX. However, we believe WCC remains well-positioned to capitalize on several secular tailwinds and to leverage its significant scale advantage to take market share and improve margins.”
