5 Best Undervalued Small-Cap Stocks According to Hedge Funds

2. Vista Outdoor Inc. (NYSE:VSTO)

Number of Hedge Fund Holders: 25  

PE Ratio: 4.95

Vista Outdoor Inc. (NYSE:VSTO) markets consumer products in the sports and recreation sector. The company is one of the largest players in the recreation market with ownership of around 39 renowned brands in the space. The total addressable market for recreation is around $100 billion. The shares have lots of room to grow as the company improves operational efficiencies and reduces the debt/EBITDA leverage. It is also improving FCF generation.

On February 4, Roth Capital analyst Matt Koranda kept a Buy rating on Vista Outdoor Inc. (NYSE:VSTO) stock with a price target of $57, backing the firm to benefit from a sustained ammo upcycle for the next few quarters. 

At the end of the fourth quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $460 million in Vista Outdoor Inc. (NYSE:VSTO), compared to 23 in the preceding quarter worth $407 million. 

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Gates Capital Management is a leading shareholder in Vista Outdoor Inc. (NYSE:VSTO) with 5.3 million shares worth more than $246 million. 

In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Vista Outdoor Inc. (NYSE:VSTO) was one of them. Here is what the fund said:

“Our Strategy outperformed with strong results from consumer discretionary stocks like Vista Outdoor Inc. (NYSE:VSTO). Vista Outdoor Inc. (NYSE:VSTO), a manufacturer of a wide range of products serving the outdoor sports and recreation markets, also performed well in the period on continued demand and growing margins.”