Conestoga Capital Advisors, an asset management company, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets started the year with a rally due to optimism about a strong economy and expectations of moderating inflation and lower interest rates. However, concerns over slowing earnings from major Technology companies, geopolitical tensions, and an upcoming announcement on tariffs led to a sharp decline in equities by the end of the first quarter. Investors sought safety, driving U.S. Treasury yields down. The Conestoga Small Cap Composite returned -11.35% (net) in the first quarter compared to the Russell 2000 Growth Index’s -11.12% return. The Conestoga SMid Cap Composite returned -5.73% compared to the Russell 2500 Growth Index’s -10.80% return. The Conestoga Micro-Cap Composite returned -8.24% vs the Russell Microcap Growth Index’s return of -17.75%. Finally, the Conestoga Mid Cap Composite returned 0.96% (net), compared to the Russell Midcap Growth Index’s -7.12% return. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.
In its first-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as Rollins, Inc. (NYSE:ROL). Rollins, Inc. (NYSE:ROL) offers pest and wildlife control services to residential and commercial customers. The one-month return of Rollins, Inc. (NYSE:ROL) was 3.05%, and its shares gained 25.72% of their value over the last 52 weeks. On April 28, 2025, Rollins, Inc. (NYSE:ROL) stock closed at $56.02 per share with a market capitalization of $27.15 billion.
Conestoga Capital Advisors stated the following regarding Rollins, Inc. (NYSE:ROL) in its Q1 2025 investor letter:
“Based in Atlanta, GA, Rollins, Inc.’s (NYSE:ROL) results continued to demonstrate the resilience of its pest control business. For the 4Q24, ROLs revenue was up 10% and EBITDA was $181 million. The company’s 2025 outlook was also solid. The company expects organic revenue growth to be 7-8% and it expects acquisitions to add another 2-3% of growth. Management also expects incremental margins to approach 30% for the full year, slightly higher than “street” estimates. In an uncertain equity market, investors highly valued the stability of the pest control business and its free cash flow.”
A pest control service technician spraying insecticide in a residential property.
Rollins, Inc. (NYSE:ROL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held Rollins, Inc. (NYSE:ROL) at the end of the fourth quarter, compared to 38 in the third quarter. In the first quarter of 2025, Rollins, Inc. (NYSE:ROL) reported revenue growth of 9.9% year-over-year. While we acknowledge the potential of Rollins, Inc. (NYSE:ROL) 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 covered Rollins, Inc. (NYSE:ROL) and shared Conestoga Capital Advisors’ views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 2025 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.