Does Agilysys (AGYS) Have a Long Runway for Growth?

Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. The Small Company Fund returned 0.48%, significantly underperforming the Russell 2000 Growth index’s 7.58% return. Following the release of the inflation report in February, the Small Company Fund experienced underperformance as investors shifted away from high-growth companies, impacting their valuations. In addition, check the fund’s top five holdings to know its best picks in 2024.

The Brown Capital Management Small Company Fund highlighted stocks like Agilysys, Inc. (NASDAQ:AGYS), in the first quarter 2024 investor letter. Agilysys, Inc. (NASDAQ:AGYS) develops and markets software-enabled solutions and services to the hospitality industry. The one-month return of Agilysys, Inc. (NASDAQ:AGYS) was -1.42%, and its shares gained 53.27% of their value over the last 52 weeks. On June 24, 2024, Agilysys, Inc. (NASDAQ:AGYS) stock closed at $98.43 per share with a market capitalization of $2.702 billion.

The Brown Capital Management Small Company Fund stated the following regarding Agilysys, Inc. (NASDAQ:AGYS) in its first quarter 2024 investor letter:

"Agilysys, Inc. (NASDAQ:AGYS) is a leading provider of SaaS and on-premise software solutions to the hospitality industry. The company’s core solutions include point-of-sale (POS) software, property management software (PMS), and Inventory and Procurement (I&P) software. Agilysys also sells more than 25 add-on products, primarily in its core PMS. These products improve operations for its customers, saving time, money and headaches, as they improve the experiences of both employees and guests. Agilysys’s clients prioritize the seamless customer experience it provides across its broad portfolio of services. Historically, Agilysys has sold to casinos and high-end resorts in the U.S., but is now expanding into hotels, cruise ships, managed food-service locations at universities, hospitals, and venues, and internationally as well. Notable customers include Caesars, Carnival, Compass, Hershey, Hilton, Intercontinental, Marriott, MGM, Royal Caribbean, and Vail Resorts.

Agilysys is delivering steadily accelerating revenue growth and improving profitability. With less than $200 million of revenue in its last fiscal year, and a large growing market opportunity that we estimate at more than $10 billion and growing in the high-single digits, we see a long runway for growth."

An expert IT engineer demonstrating a new software solution to hotel managers in a boardroom.

Agilysys, Inc. (NASDAQ:AGYS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Agilysys, Inc. (NASDAQ:AGYS) at the end of the first quarter which was 21 in the previous quarter. Agilysys, Inc.'s (NASDAQ: AGYS) revenue for the fiscal second quarter was $62.2 million, marking a 17.6% increase over the prior year period. While we acknowledge the potential of Agilysys, Inc. (NASDAQ:AGYS) 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 Agilysys, Inc. (NASDAQ:AGYS) in another article and shared Wasatch Small Cap Growth Strategy's views on the company. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.