Is TREX a Smart Long-Term Investment?

Wasatch Global Investors, an investment management firm, published its “Wasatch Core Growth Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. During the fourth quarter, the benchmark Russell 2000® Index rose 2.14% while the Russell 2000 Growth Index increased 0.01%. Outperforming its benchmark, the Wasatch Core Growth Fund—Investor Class gained 5.72%. For the one-year period ended December 31, 2021, the Fund’s Investor Class returned 21.03%, which compared favorably to the 14.82% gain in the Russell 2000 Index and the 2.83% increase in the Russell 2000 Growth Index. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Wasatch Core Growth Fund, in its Q4 2021 investor letter, mentioned Trex Company, Inc. (NYSE: TREX) and discussed its stance on the firm. Trex Company, Inc. is a Winchester, Virginia-based outdoor items manufacturing company with an $8.7 billion market capitalization. TREX delivered a -43.18% return since the beginning of the year, while its 12-month returns are down by -9.89%. The stock closed at $76.73 per share on March 03, 2022.

Here is what Wasatch Core Growth Fund has to say about Trex Company, Inc. in its Q4 2021 investor letter:

“Trex Co., Inc. (TREX) was also a large contributor. The company is a manufacturer and seller of high-performance, low-maintenance composite (non-wood) decking and accessories. Trex has continued to take market share from traditional suppliers of wood products, which have shorter lifespans and require more upkeep than composites. While the stock price can be volatile, the key factor for us is that the company has excellent prospects for intermediate- to long-term growth. In other words, we believe the Trex story is more about market-share dominance than about cyclical demand. Recently, the company reported strong growth in revenues, margins and earnings. Moreover, Trex has completed a major expansion of facilities to meet higher demand, and an even larger expansion has been announced. These expansions increase our confidence that the size of the market for composite products will grow significantly and that Trex will continue to take share for years on end.”

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Our calculations show that Trex Company, Inc. (NYSE: TREX) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. TREX was in 28 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 21 funds in the previous quarter. Trex Company, Inc. (NYSE: TREX) delivered a -43.27% return in the past 3 months.

In February 2022, we also shared another hedge fund’s views on TREX in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.