3. Blue Bird Corporation (NASDAQ:BLBD)
Number of Hedge Funds Holders: 27
Blue Bird Corporation (NASDAQ:BLBD) is another best small cap automotive stock to buy. The company has a market capitalization of $1.504 billion as of August 4, 2024.
Blue Bird Corporation (NASDAQ:BLBD) is a leading manufacturer of school buses in the United States and operates by designing, manufacturing, and selling type C, type D, and speciality school buses. Apart from the traditional diesel engine buses, the company also provides alternative fueling options such as electric power, propane, gasoline, and compressed natural gas engines. Blue Bird Corporation (NASDAQ:BLBD) also operates in replacement parts for its vehicles and provides bus finance and extended warranties services. The company serves a network of dealers, fleet operators, government agencies, and independent service centers.
The company posted a record-breaking second quarter of 2024. Blue Bird Corporation (NASDAQ:BLBD) grew its net sales by 15% to a record-high $346 million during the quarter. The increase in revenue was on the back of 2,254 buses sold during the quarter, which was slightly down versus the last year, but 6% above Q1 sales. The company was able to achieve record revenue despite lower bus volume sold as compared to last year due to higher bus pricing. The increase in bus prices also resulted in the company generating $46 million in adjusted EBITDA almost double versus last year and well above the guidance range of $25 million to $35 million. Blue Bird Corporation has been doing well in keeping up its order backlog despite the price hike, which demonstrates strong market demand for its buses. The firm order backlog was worth $850 million at the end of Q2 reflecting 5,900 buses in the order backlog, almost 30% higher than the previous quarter.
The competitive edge of the company lies in its ability to provide alternative fueling options, especially the electric power buses. During the second quarter the electric bus deliveries for the company reached an all time high and accounted for 9% of total units sold. The company has raised its full year guidance and expects revenue of $1.3 billion and an adjusted EBITDA of $145 million to $165 million.
The company has significant room for growth as it has $79 million in cash and cash equivalents and grew its free cash flow by $30 million year-over-year. This strong financial position puts the company at a sweet spot to capitalize on the growing demand of school buses.
BLBD provides an attractive entry point for investors as it is trading at 17 times its forward earnings, an 8% discount to its sector, and has a history of growing its top line and bottom line. The company has grown its revenue by 4.5% and net income by 18% during the past 5 years. 7 Analysts hold a Strong Buy rating on the stock and their average price target of $60 represents an upside of 28.81% from current levels.
BLBD was held by 27 hedge funds during the Q1 of 2024, with total stakes worth $215.8 million. Of those, 325 Capital was the dominant shareholder in the company and held a stake worth $44.6 million.
