12 Best New Stocks to Buy According to Hedge Funds

5) Veralto Corporation (NYSE:VLTO)

Number of Hedge Fund Holders: 43

Veralto Corporation (NYSE:VLTO) provides water analytics, water treatment, marking and coding, and packaging and color services. The company began trading as a publicly traded company on 2^nd October 2023.

Jefferies believes in Veralto Corporation (NYSE:VLTO)’s long-term growth potential, which should stem from its focus on mission-critical applications, consistent pricing power, and a strong direct-to-customer distribution channel. With the company’s recurring sales accounting for ~61% of total sales during the nine-month period that ended September 27, 2024, Wall Street believes that this provides some sort of stability of revenues.

As per Jefferies, an acceleration in growth is expected in 2025, fueled by a recovery in consumer-packaged goods (CPG) and industrial markets. With industries seeking to reduce their water footprint and operating costs, there seems to be growing interest in closed-loop water systems and process water recycling. Therefore, Veralto Corporation (NYSE:VLTO)’s capabilities in these areas should drive significant growth.

As consumer demand stabilizes and increases, Veralto Corporation (NYSE:VLTO) will witness improved volumes in its Materials & Chemicals (M&C) and Products & Consumables (P&C) subsegments.

Jefferies believes that Veralto Corporation (NYSE:VLTO)’s combination of mid-single-digit (MSD) organic growth and healthy potential for strategic capital deployment places it well to compound its earnings at a double-digit rate.

While Jefferies is bullish on Veralto Corporation (NYSE:VLTO), Aristotle Capital Management, LLC recently sold its position because the firm believes that its other holdings within the water value chain are more optimal investments. Here is what the fund said:

“In the fourth quarter of 2023, we received shares of the water and product quality company Veralto Corporation (NYSE:VLTO) when Danaher, a current Value Equity holding, spun off the business. After further assessing the now independently operated Veralto, we decided to exit our position. We believe our other holdings within the water value chain, including Xylem, American Water Works (our most recent purchase) and to some extent Ecolab, are more optimal investments.”