Will Carter’s (CRI) be Able to Maintain its Industry Leadership Position?

Palm Valley Capital Management, an investment management firm, released the “Palm Valley Capital Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, Palm Valley Capital Fund increased 0.79% compared to a 3.11% and 3.64% decline for the S&P SmallCap 600 Index and the Morningstar Small Cap Index, respectively. In Q2, small caps continued their trend of underperforming big caps. The fund's equity securities saw a slight increase of +0.24% in Q2 before operational expenses (fees). On the other hand, interest received on Treasury bills boosted quarterly profit. At the end of the period, cash equivalents made up 81.4% of the firm's assets. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Palm Valley Capital Management highlighted stocks like Carter’s, Inc. (NYSE:CRI), in the second quarter 2024 investor letter. Carter’s, Inc. (NYSE:CRI) designs, sources, and markets branded childrenswear. The one-month return of Carter’s, Inc. (NYSE:CRI) was -5.51%, and its shares lost 17.79% of their value over the last 52 weeks. On July 9, 2024, Carter’s, Inc. (NYSE:CRI) stock closed at $61.38 per share with a market capitalization of $2.24 billion.

Palm Valley Capital Management stated the following regarding Carter’s, Inc. (NYSE:CRI) in its Q2 2024 investor letter:

"The three holdings most negatively impacting the Fund’s return this quarter were Amdocs (ticker: DOX), TrueBlue, and Carter’s, Inc. (NYSE:CRI), which all had a similar drag on performance.

Carter’s, the number one branded marketer of apparel for young children in the U.S., is experiencing the same difficult comparisons facing many consumer companies. The combination of substantial accumulated inflation over the past three years and the end of pandemic stimulus payments has resulted in compressed budgets for many consumers. Children’s clothing hasn’t been spared from cutbacks, as evidenced by the travails of competing retailer The Children’s Place. Carter’s sells merchandise online and in its own branded stores as well as through major retailers like Walmart, Target, and Amazon. While Carter’s operating results may remain soft in the near term, we expect the company to retain its industry leadership position. Carter’s lineage extends back to 1865!"

A colorful assortment of children's apparel with different themes, capturing the dynamism of the business.

Carter’s, Inc. (NYSE:CRI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Carter’s, Inc. (NYSE:CRI) at the end of the first quarter which was 35 in the previous quarter. While we acknowledge the potential of Carter’s, Inc. (NYSE:CRI) 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.

We discussed Carter’s, Inc. (NYSE:CRI) in another article and shared the list of stocks hedge funds were pitching in their 2023 Q3 investor letters. 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.