1. Perimeter Solutions Inc. (NYSE:PRM)
Market Capitalization: $1.89 Billion
Number of Hedge Fund Holders: 25
Perimeter Solutions Inc. (NYSE:PRM) is a prominent global manufacturer of firefighting chemicals and lubricant additives. The company operates primarily in two segments: Fire Safety and Specialty Products. The Fire Safety segment formulates and produces fire management products, including retardants and foams, to tackle various fire types. Meanwhile, the Specialty Products segment focuses on producing Phosphorus Pentasulfide (P2S5), essential for high-quality lubricant additives that enhance engine performance.
In the third quarter of 2024, Perimeter Solutions Inc. (NYSE:PRM) reported impressive financial results, with net sales soaring by 102% to $288.4 million, compared to $142.7 million in the same quarter last year. Adjusted EBITDA also increased significantly by 177%, reaching $170.4 million from $61.5 million previously. This robust growth indicates strong demand for their products and effective operational strategies.
In November 2024, Perimeter Solutions Inc. (NYSE:PRM) completed its re-domiciliation from Luxembourg to Delaware, a strategic move aimed at aligning its legal structure with its US operations, which are responsible for the majority of the company’s revenue and EBITDA. This transition is expected to simplify regulatory processes and improve tax efficiency.
Perimeter Solutions Inc. (NYSE:PRM) maintains a solid liquidity position with approximately $223.1 million in cash and equivalents by the end of Q3 2024. The company has prioritized reinvestment into its operations, including increased capital expenditures for research and development and field services, which positions it well for future growth. With a strong market presence and strategic initiatives in place, Perimeter Solutions Inc. (NYSE:PRM) appears to be a compelling investment opportunity in the specialty chemicals sector.
PRM ranks among the best chemical stocks. According to Insider Monkey’s database, Perimeter Solutions Inc. (NYSE:PRM) was held by 25 hedge funds in Q3 2024, up from 20 in the previous quarter. Weitz Investment Management stated the following regarding Perimeter Solutions Inc. (NYSE:PRM) in its “Multi-Cap Equity Fund” third-quarter 2024 investor letter:
“The absolute performance news was also good this quarter. Gains were broad based: just over half of our companies experienced double-digit gains and there were few material detractors from quarterly performance. The Fund’s top performer for the quarter was Perimeter Solutions Inc. (NYSE:PRM), the leading provider of wildfire retardants. An increased level of wildfire activity has generated strong demand and generated better than expected cash flows. With its much-improved balance sheet, Perimeter’s management is more credibly in position to evaluate additional investment opportunities. Given the breadth of strength, portfolio activity skewed toward trims in the third quarter. Last year, we added assertively to our holdings of Perimeter Solutions as the stock declined. At that time, Perimeter was experiencing weaker than expected results due to a below average wildfire season. This year, the opposite has been true, and we have taken profits as shares have rallied.”
Overall, PRM ranks first among the 11 best small-cap chemical stocks to buy according to hedge funds. While we acknowledge the potential of chemical companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PRM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
