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.
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