Top Investors’ Stock Portfolio: 7 Small-Cap Stocks to Invest In

2) Vestis Corporation (NYSE:VSTS)

Market Cap as of 9 October: $1.95 billion

Number of Hedge Fund Holders: 34

Vestis Corporation (NYSE:VSTS) offers uniform rentals and workplace supplies in the US and Canada.

Market experts opine that new business wins and improved customer retention rates should continue to help Vestis Corporation (NYSE:VSTS)’s growth trajectory. The company made substantial loan principal payments and entered a $250 million accounts receivable securitization facility in order to reduce its net debt. It targets achieving a leverage ratio of between 1.5 – 2.5 times and is confident in achieving the goal.

For the full year, Vestis Corporation (NYSE:VSTS) is expecting a positive pricing impact of between 1% – 2%. Moving forward, it will focus on customer experience and leveraging national account wins to fuel volume and operating leverage. Vestis Corporation (NYSE:VSTS) has been implementing initiatives in a bid to enhance customer service quality, which includes addressing shortages and ensuring on-time delivery.

Overall, Vestis Corporation (NYSE:VSTS)’s efforts to win large national accounts and optimize operations, like logistics and merchandise management, should help fuel future success. The company expects fiscal 2024 Adjusted EBITDA margin to be towards the higher end of the range of 12.0% – 12.4%, inclusive of ~$18 million in incremental public company costs. Its strategic imperatives consist of disciplined capital allocation with deleveraging as a priority.

In Q3 2024, Vestis Corporation (NYSE:VSTS) saw FCF of $125 million in fiscal year-to-date, reflecting a rise of 22.6% YoY. Wall Street believes that the company has maintained its emphasis on leveraging its strong cash flows and effectively managing the balance sheet.

As of Q2 2024, 34 hedge funds reported owning stakes in Vestis Corporation (NYSE:VSTS).