Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, the fund returned 2.38% compared to a -1.06 % return for the Russell 2000 Value Index. For the full year, the fund returned 10.76% compared to an 8.05% return for the index. The firm’s focus is on long-term performance, aiming to outperform the Russell 2000 Value Index with less risk throughout the entire market cycle. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
In its fourth quarter 2024 investor letter, FPA Queens Road Small Cap Value Fund emphasized stocks such as Sprouts Farmers Market, Inc. (NASDAQ:SFM). Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a retailer of fresh, natural, and organic food products under the Sprouts brand. The one-month return of Sprouts Farmers Market, Inc. (NASDAQ:SFM) was -14.21%, and its shares gained 129.48% of their value over the last 52 weeks. On March 4, 2025, Sprouts Farmers Market, Inc. (NASDAQ:SFM) stock closed at $145.35 per share with a market capitalization of $14.329 billion.
FPA Queens Road Small Cap Value Fund stated the following regarding Sprouts Farmers Market, Inc. (NASDAQ:SFM) in its Q4 2024 investor letter:
“Sprouts Farmers Market, Inc. (NASDAQ:SFM) is a grocer focusing on fresh, natural and organic products. The company has best-in-class margins, attractive returns on capital, great new store economics, and accelerated unit growth from 12 stores a year to 35 stores in 2024 on a base of roughly 400 stores.22 Over the past year, the stock has performed well after reporting strong operating results and starting from a reasonable initial valuation.23 Through the first three quarters of 2024, the company delivered strong earnings growth. Consensus estimates expect Sprouts to grow EPS by 30% in 2024 and 14% in 2025.24 We have largely maintained our position and allowed it to appreciate, only beginning to trim in 2024 Q3. Although SFM’s share price has increased faster than bottom-line results, we believe SFM still trades in the “range of reasonableness” for a high-quality, non-cyclical franchise that can reinvest capital at attractive rates of return.”
A bright, colorful display of fresh produce in a grocery store.
Sprouts Farmers Market, Inc. (NASDAQ:SFM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held Sprouts Farmers Market, Inc. (NASDAQ:SFM) at the end of the fourth quarter which was 37 in the previous quarter. Sprouts Farmers Market, Inc.’s (NASDAQ:SFM) sales rose over 13% to $7.7 billion in fiscal year 2024 due to 7.6% comparable store sales growth and outstanding new store performance. While we acknowledge the potential of Sprouts Farmers Market, Inc. (NASDAQ:SFM) as an investment, 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Sprouts Farmers Market, Inc. (NASDAQ:SFM) and shared the list of best grocery store stocks to buy. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.