What Makes Energy Recovery (ERII) a Worthy Investment?
Conestoga Capital Advisors, an asset management company, released its “Micro-Cap Strategy” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. The second quarter of 2024 may be regarded as a time of moderation. Economic indicators largely reflected slowing growth and easing inflation. The moderation theme also drives equity markets. Large-cap stocks, as measured by the S&P 500, rose 3.9% in the second quarter, however, small-cap stocks lagged again, with the Russell 2000 Index declining -3.3% and the Russell 2000 Growth Index declining -2.9%. The Micro Cap Strategy declined -8.52% net-of-fees in the quarter compared to a -5.57% return for the Russell Microcap Growth Index. Underperformance was mostly caused by negative stock selection effects in the Telecommunications and industrial sectors, with Health Care being the most addictive. Sector allocation effects influenced relative returns. Also, low-beta companies with cheap multiples, the quarter’s biggest winners, were a drag on the portfolio. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Conestoga Capital Advisors highlighted stocks like Energy Recovery, Inc. (NASDAQ:ERII) in the second quarter 2024 investor letter. Energy Recovery, Inc. (NASDAQ:ERII) develops, manufactures, and distributes energy efficiency technology solutions. The one-month return of Energy Recovery, Inc. (NASDAQ:ERII) was 20.29%, and its shares lost 36.66% of their value over the last 52 weeks. On August 15, 2024, Energy Recovery, Inc. (NASDAQ:ERII) stock closed at $17.19 per share with a market capitalization of $992.293 million.
Conestoga Capital Advisors stated the following regarding Energy Recovery, Inc. (NASDAQ:ERII) in its Q2 2024 investor letter:
"Energy Recovery, Inc. (NASDAQ:ERII): ERII is a global leader in energy efficiency technology. ERII's main product is the pressure exchanger (PX), which has become a platform to service numerous industries, including desalination, wastewater, and refrigeration. The PX recycles energy within a system with 98% efficiency, leading to savings of up to 60% in energy usage. ERII’s primary market, desalination, has strong secular tailwinds as water scarcity is an increasingly critical issue for many countries globally. The United Nations estimates there will be a 40% gap in freshwater supplies by 2030."
A treatment plant with a large industrial wastewater treatment pipe in the foreground.
Energy Recovery, Inc. (NASDAQ:ERII) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held Energy Recovery, Inc. (NASDAQ:ERII) at the end of the first quarter which was 17 in the previous quarter. While we acknowledge the potential of Energy Recovery, Inc. (NASDAQ:ERII) 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 discussed Energy Recovery, Inc. (NASDAQ:ERII) and shared Anchor Capital Management’s top stock picks and former holdings in 2024. In addition, please check out our hedge fund investor letters Q2 2024 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.