Conestoga Capital Advisors, an asset management company, released its third-quarter 2024 investor letter. A copy of the letter can be downloaded here. At its September meeting, the Federal Reserve lowered the Federal Funds rate by 50 basis points due to weaker employment growth and moderate inflation. Equity markets welcomed the news, raising optimism for a soft landing in the U.S. economy. On September 26th, the S&P 500 Index achieved a record high, the Russell 2000 Index also moved higher over the quarter but remains roughly 10% below its all-time high. The Conestoga Small Cap Composite surged 10.09% (net) in the third quarter outperforming the Russell 2000 Growth Index’s 8.41% return. The Conestoga SMid Cap Composite returned 12.94% (net) versus the Russell 2500 Growth Index’s 6.99% return. The Conestoga Micro Cap Composite advanced 7.60% (net) but trailed the Russell Microcap Growth Index’s return of 8.57%. Finally, the Conestoga Mid Cap Composite returned 8.36% (net) outperforming the Russell Midcap Growth Index’s 6.54%. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2024.

Conestoga Capital Advisors highlighted stocks like U.S. Physical Therapy, Inc. (NYSE:USPH), in the third quarter 2024 investor letter. U.S. Physical Therapy, Inc. (NYSE:USPH) is an outpatient physical therapy clinic operator. The one-month return of U.S. Physical Therapy, Inc. (NYSE:USPH) was -1.66%, and its shares lost 4.83% of their value over the last 52 weeks. On October 22, 2024, U.S. Physical Therapy, Inc. (NYSE:USPH) stock closed at $82.89 per share with a market capitalization of $1.25 billion.

Conestoga Capital Advisors stated the following regarding U.S. Physical Therapy, Inc. (NYSE:USPH) in its Q3 2024 investor letter:

"U.S. Physical Therapy, Inc. (NYSE:USPH) is a leading provider of outpatient physical therapy clinics. Shares fell over the quarter as reported earnings were lower than expected. Medicare accounts for almost one-third of their revenue base and lower reimbursements were a drag on results. We believe future growth prospects for the company remain promising as they continue positive negotiations with commercial insurance payers and make strategic acquisitions for new clinics."

A healthcare professional providing physical therapy to an elderly patient.

U.S. Physical Therapy, Inc. (NYSE:USPH) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held U.S. Physical Therapy, Inc. (NYSE:USPH) at the end of the second quarter which was 10 in the previous quarter. While we acknowledge the potential of U.S. Physical Therapy, Inc. (NYSE:USPH) 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.