I’ve written a lot about one of my favorite companies for the long-term, DXP Enterprises (NASDAQ:DXPE). I initially recommended DXPE in the low 40s, only to watch it get punished by the market due to what was perceived as a lackluster quarter. At that point, with the stock languishing in the low 30s, I recommended doubling down on the stock to take advantage of the market overreaction.
I was right: the stock has climbed back above 47. While my original thesis of industry consolidation is still sound, and I still believe in the company over the long-term, my reason for doubling down on the stock is now gone as we have made over 40% on the second trade in less than 4 months.
DXPE is a small cap whose only major catalysts are quarterly earnings. Until that time, it will fluctuate based on general market conditions. Given the current market uncertainty, I am closing our second trade on DXPE in order to lock in profits. If the stock dips again to unreasonably cheap levels, we will be buyers again. Depending on your risk tolerance, you may wish to sell or hold all of your DXPE holdings now and re-evaluate around next quarter’s earnings report.
Disclosure: SmartGuyAB is long DXPE.
DXPE 1-yr chart: