1. Ferroglobe PLC (NASDAQ:GSM)
Stock Price as of September 3: $4.28
Number of Hedge Fund Holders: 30
Ferroglobe PLC (NASDAQ:GSM), a prominent global manufacturer of silicon metal, specialty alloys, and ferroalloys, is currently positioned for significant growth. The company’s diverse product range includes essential materials like ferrosilicon for steelmaking and manganese alloys for steel deoxidizing and desulfurizing.
The company also produces silica fume, which enhances the strength and durability of high-performance concrete. The company’s reach is extensive and diverse as it serves a broad spectrum of fast-evolving markets such as solar energy, electronics, automotive, consumer products, construction, and energy.
In Q2, it reported a non-GAAP EPS of $0.13, which beat expectations by $0.08. The company achieved revenues of $451.05 million, which surpassed forecasts by $25.5 million. The results are a sign of strong operational efficiency and financial health. The company’s adjusted EBITDA for the quarter reached $58 million. The company’s EBITDA margins increased from 7% in the first quarter to 13% in the second quarter, driven by higher sales volumes, improved pricing, and reduced production costs.
Dr. Marco Levi, Ferroglobe’s (NASDAQ:GSM) CEO, noted that the company performed well across various areas during the quarter. Sales increased by 15%, and adjusted EBITDA more than doubled from the previous quarter. A key achievement was the restart of its French operations in April, which boosted production of silicon metal and manganese-based specialty alloys. This operational revival has contributed to the overall increase in volumes and improved financial outcomes.
The company also made significant progress in its U.S. ferrosilicon trade case, where the Department of Commerce imposed substantial anti-dumping and countervailing duties on Russian ferrosilicon imports. This decision, announced in June, is expected to benefit Ferroglobe’s (NASDAQ:GSM) U.S. ferrosilicon business starting in early 2025 by reducing competition from lower-priced imports.
Additionally, the company is advancing in the EV sector. Its testing of Coreshell nanocoating technology for silicon-rich anodes has shown promising results, which places the company well in a good position to capitalize on the growing demand for high-performance EV batteries. It tops our list of the best quality penny stocks to buy.
In the second quarter, 30 hedge funds held positions in Ferroglobe (NASDAQ:GSM) and their stakes amounted to $164.590 million. As of June 30, Hosking Partners is the most dominant shareholder in the company and has a position worth $48.8 million.
Ave Maria Focused Fund stated the following regarding Ferroglobe PLC (NASDAQ:GSM) in its fourth quarter 2023 investor letter:
“Ferroglobe PLC (NASDAQ:GSM) was added to the portfolio in the fourth quarter. Ferroglobe is a leading manufacturer of silicon metal, which is a critical input for hundreds of industrial and consumer applications. It was formed via a merger of two companies, but the integration initially went poorly, causing a decline in the company’s stock price. New management was brought in to rectify the situation. The new team successfully completed the integration, which lowered the ongoing costs of the operations and eliminated the company’s debt. Going forward, regulations in the United States and Europe should dramatically increase the production of solar panels. Silicon metal is an irreplaceable input for solar panels, and this new demand for silicon metal will make Ferroglobe’s revenue less cyclical. Now that Ferroglobe has a fortress balance sheet, management has room to enact a large share repurchase initiative. At the time of the initial investment, the Fund was able to purchase Ferroglobe for almost half the replacement cost of its assets. The Fund exited positions in Nvidia, Tyler Technologies, and Valvoline, in part, to fund the Ferroglobe purchase and increase the position sizes of some existing holdings.”
While we acknowledge the potential of Ferroglobe PLC (NASDAQ:GSM) to grow, 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 more promising than the stocks on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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