Construction Partners (ROAD) Fell Amid Profit Taking and General Industry Weakness

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 Construction Partners, Inc. (NASDAQ:ROAD). Construction Partners, Inc. (NASDAQ:ROAD) is a civil infrastructure company that constructs and maintains roadways. The one-month return of Construction Partners, Inc. (NASDAQ:ROAD) was 12.15%, and its shares gained 53.09% of their value over the last 52 weeks. On April 28, 2025, Construction Partners, Inc. (NASDAQ:ROAD) stock closed at $80.60 per share with a market capitalization of $4.51 billion.

Conestoga Capital Advisors stated the following regarding Construction Partners, Inc. (NASDAQ:ROAD) in its Q1 2025 investor letter:

"After being one of the portfolio’s leading contributor in six of the past seven quarters, shares in Construction Partners, Inc. (NASDAQ:ROAD) pulled back during the first quarter of 2025. This was likely due to some profit- taking and general weakness in infrastructure stocks after strong gains in 2024. ROAD was also the subject of a short report in late January, which we found to be lacking in terms of new information. ROAD reported strong fiscal first quarter results, with the quarter well ahead of estimates and backlog again hitting a record. Management raised guidance for the year, a positive sign that the strong demand it is witnessing should continue."

Construction Partners, Inc. (NASDAQ:ROAD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Construction Partners, Inc. (NASDAQ:ROAD) at the end of the fourth quarter compared to 16 in the third quarter. Construction Partners, Inc.’s (NASDAQ:ROAD) revenue was $561.6 million in the fiscal first quarter of 2025, an increase of 41.6% compared to the same quarter a year ago. While we acknowledge the potential of Construction Partners, Inc. (NASDAQ:ROAD) 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 covered Construction Partners, Inc. (NASDAQ:ROAD) and shared Wasatch Small Cap Growth Strategy's views on the company in the previous quarter. Construction Partners, Inc. (NASDAQ: ROAD) positively impacted Conestoga Capital Advisors' performance last quarter, fueled by high demand in the road maintenance and infrastructure sector. In addition, please check out our hedge fund investor letters Q1 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.