Federal Signal Corp. (FSS) Rose on Robust Results

Conestoga Capital Advisors, an asset management company, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The second quarter began with a historically poor start but gained momentum later as tariff fears subsided and market volatility dropped precipitously. Conestoga Small Cap Composite returned 4.76% in the quarter compared to 11.97% for the Russell 2000 Growth Index. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.

In its second quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as Federal Signal Corporation (NYSE:FSS). Federal Signal Corporation (NYSE:FSS) is a U.S.-based company that provides products and integrated solutions for municipal, governmental, industrial, and commercial customers. Federal Signal Corporation (NYSE:FSS) shares returned 2.90% over the past month and appreciated by 8.24% over the last 12 months. On July 24, 2025, Federal Signal Corporation (NYSE:FSS) stock closed at $107.48 per share, with a market capitalization of $6.553 billion.

Conestoga Capital Advisors stated the following regarding Federal Signal Corporation (NYSE:FSS) in its second quarter 2025 investor letter:

"Federal Signal Corporation (NYSE:FSS): Founded in 1901, FSS is a leading manufacturer of specialized vehicles for maintenance and infrastructure markets (street sweeping, sewer cleaning, hydro excavation, dump trucks, etc.) and safety and security systems (outdoor warning sirens, emergency vehicle lighting, etc.) FSS reported a strong quarter, highlighted by solid organic revenue growth and much stronger than expected orders. Management continues to see a robust demand environment, which they will be better positioned to meet as production rates increase."

Federal Signal Corporation (NYSE:FSS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 34 hedge fund portfolios held Federal Signal Corporation (NYSE:FSS) at the end of the first quarter compared to 29 in the previous quarter. Federal Signal Corporation's (NYSE:FSS) consolidated net sales for the first quarter were $464 million, up 9% compared to last year. While we acknowledge the potential of Federal Signal Corporation (NYSE:FSS) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In addition, please check out our hedge fund investor letters Q2 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.