Wells Fargo’s Best Growth Stocks: 28 Stocks With The Highest Consensus EPS Growth Estimates

25. Trex Company, Inc. (NYSE:TREX)

Consensus Long-Term EPS Growth Estimate: 11%

Number of Hedge Fund Holders: 36

Trex Company, Inc. (NYSE:TREX) is a building products firm that sells outdoor items such as decks, railings, pickets, and other items. This ties its fate to the construction industry and makes strong building activity indispensable to the stock performance. As a result, Trex Company, Inc. (NYSE:TREX)’s shares are down 15.5% year to date since the firm has struggled with managing inventory levels. Companies like Trex Company, Inc. (NYSE:TREX) rely on shipping high volumes in their sales channels to enjoy margins. However, if construction activity is muted, then their channels can become overfilled and take longer to ‘digest’ inventory. This has also been the case with Trex Company, Inc. (NYSE:TREX), and as its channel remains filled, the firm is in a wait-and-watch mode before it can ramp shipments again.

Conestoga Capital Advisors mentioned Trex Company, Inc. (NYSE:TREX) in its Q3 2024 investor letter. Here is what the fund said:

“Trex Company, Inc. (NYSE:TREX) is the market share leader in composite decking and railing and has been a long-term holding. After the stock price reached a two-year high in late March, shares sold off over the last six months given some macro concerns and several decking surveys that showed a weakening decking market. Also, TREX management lowered their guidance for earnings in the year ahead. Despite the near-term headwinds, we remain positive on TREX given the continued consumer preference for composites over wood, as well as some exciting new products from TREX such as TREX’s Lineage Decking which has heat mitigation technology.”