We came across a bullish thesis on QXO, Inc. on Kairos Research’s Substack. In this article, we will summarize the bulls’ thesis on QXO. QXO, Inc.'s share was trading at $23.24 as of January 28th. QXO’s trailing and forward P/E were 2.11 and 66.67 respectively according to Yahoo Finance. QXO, Inc. distributes roofing, waterproofing, and other building products in the United States. Brad Jacobs, a serial industrial entrepreneur with a 40-year track record of creating value through roll-ups, is now focused ...

Core Insights - Tsai Capital Corporation's Growth Equity Strategy achieved an 8.5% gain before fees and 7.6% after fees for the year ending December 31, 2025, underperforming the S&P 500 Index's 17.9% return [1] - Since its inception 26 years ago, the strategy has gained 970% cumulatively before fees and 658% after fees, compared to the S&P 500 Index's total return of 639% [1] - The strategy focuses on long-term investments in exceptional companies that effectively allocate capital towards promising ideas and talent, currently holding 17 high-quality growth companies [1] Company Highlights - QXO, Inc. (NYSE:QXO) is a roofing, waterproofing, and building products distributor, with a one-month return of 20.48% and a 52-week gain of 73.17% [2] - As of November 12, 2025, QXO, Inc. closed at $23.24 per share, with a market capitalization of $16.412 billion [2] - Tsai Capital initiated a position in QXO in 2024 at approximately $11 per share, under the leadership of Brad Jacobs, who aims to disrupt the $800 billion building products distribution industry [3] Investment Sentiment - QXO, Inc. is not among the 30 most popular stocks among hedge funds, with 65 hedge fund portfolios holding the stock at the end of the third quarter, unchanged from the previous quarter [4] - While QXO is recognized for its potential, the company believes certain AI stocks present greater upside potential and less downside risk [4]

Company Overview - QXO Inc (NYSE:QXO) is a tech-enabled distributor of building products, including roofing, waterproofing, and related supplies, marketed through contractors, distributors, and suppliers [4] Analyst Ratings - Michael Dahl from RBC Capital Markets assigned an Outperform rating to QXO Inc, lowering the target price from $33 to $30, while still expecting an upside of over 25% [1] - Citi analyst Anthony Pettinari reaffirmed a Buy rating for QXO Inc, reducing the target price estimates from $33 to $31 as part of Citi's 2026 outlook on homebuilding and building products [3] Market Sentiment - Dahl's cautious views on housing affordability indicate ongoing challenges, with mixed sentiment for non-residential markets influenced by policy uncertainties, interest rate changes, and tariffs [2] - Despite the challenges, attractive valuations for building products OEMs are noted [2] Growth Strategy - QXO Inc is aggressively pursuing an inorganic growth strategy, aiming to expand its topline to $50 billion within the next decade [4]

Group 1 - QXO, Inc. (NYSE:QXO) is identified as a stock under $50 with significant investment potential, with Oppenheimer raising its price target to $30 from $27 while maintaining an Outperform rating [1] - Benchmark has also maintained a Buy rating on QXO, Inc. with a price target of $50, indicating an upside potential of 112.68% [2] - The company is viewed as a "Best Idea" for investment due to the anticipation of a potential deal announcement that could lead to "multiple arbitrage" for the stock [3] Group 2 - QXO, Inc. has recently raised equity for the third time, with previous raises contingent on announcing meaningful M&A activity by July 15, 2026 [1] - The company has secured $3 billion recently, positioning it favorably for its next acquisition target [3] - QXO, Inc. operates as a distributor of roofing, waterproofing, and other building products, serving a diverse client base including contractors, distributors, and suppliers [3]

Group 1: J.B. Hunt Transport Services Inc - J.B. Hunt reported fourth-quarter revenue of $3.097 billion, slightly below estimates of $3.099 billion [2] - The company reported earnings of $1.90 per share for the fourth quarter, beating estimates of $1.77 per share [2] - Shares of J.B. Hunt Transport fell 4.2% to $197.86 in pre-market trading [2] Group 2: Other Stocks in Pre-Market Trading - TryHard Holdings Limited fell 16.4% to $6.35 in pre-market trading after a 76% drop on Thursday due to a joint venture announcement [3] - High Roller Technologies, Inc. declined 12.9% to $20.64 in pre-market trading after a 25% increase on Thursday following a non-binding Letter of Intent [3] - Ambitions Enterprise Management Co. L.L.C fell 10.9% to $26.17 in pre-market trading after a 90% jump on Thursday [3] - Sasol Limited fell 4.9% to $6.80 in pre-market trading after a 4% decline on Thursday [3] - QXO Inc dipped 3.5% to $24.14 in pre-market trading after announcing a $750 million common stock offering and reporting preliminary fourth-quarter net sales of $2.19 billion [3] - Ermenegildo Zegna N.V. fell 3.5% to $10.64 in pre-market trading [3] - NovaBay Pharmaceuticals, Inc. shares declined 3.2% to $12.29 in pre-market trading [3]

Core Insights - PainReform Ltd. announced a name change and is expanding into diversified healthcare and AI-driven energy platforms, resulting in a 27.4% increase in share price to $1.02 in pre-market trading [1] Gainers - Acco Group Holdings Limited saw a significant gain of 219.4%, reaching $9.40 in pre-market trading [4] - Venus Concept Inc. increased by 72.2% to $2.48 [4] - Jaguar Health, Inc. rose 41.3% to $1.08 following a licensing agreement with Woodward Specialty [4] - ImmunityBio, Inc. gained 22.8% to $4.85, with preliminary net product revenue for Anktiva projected at approximately $113 million for fiscal 2025, marking a 700% year-over-year increase [4] - OneMedNet Corporation rose 14.2% to $0.9711 after a previous decline [4] - Brand Engagement Network, Inc. increased by 13.8% to $6.50 [4] - Springview Holdings Ltd rose 13.4% to $19.75 after a substantial 657% increase on Thursday [4] - Creative Global Technology Holdings Limited gained 10.7% to $4.22 after a 52% jump on Thursday [4] - Kopin Corporation increased by 8.1% to $3.20 [4] Losers - Callan JMB Inc. fell 20.7% to $3.33 after a 275% increase on Thursday due to a strategic agreement with Biostax Corp [4] - Erayak Power Solution Group Inc. decreased by 18.3% to $3.21 after an 18% rise on Thursday [4] - TryHard Holdings Limited dropped 16.4% to $6.35 following a 76% decline on Thursday due to a joint venture announcement [4] - iOThree Limited shares dipped 15% to $2.56 [4] - NOVONIX Limited fell 14% to $1.17 [4] - Moolec Science SA tumbled 13.1% to $6.69 after an 118% increase on Thursday [4] - High Roller Technologies, Inc. declined 12.9% to $20.64 after a 25% rise on Thursday [4] - Bonk, Inc. fell 10.4% to $3.55 after a 42% increase on Thursday due to acquisition news [4] - J B Hunt Transport Services Inc fell 4.2% to $197.86, reporting mixed financial results for the fourth quarter [4] - QXO Inc dipped 3.5% to $24.14 after announcing a $750 million stock offering and preliminary fourth-quarter net sales of $2.19 billion [4]

Core Viewpoint - QXO, Inc. has announced a public offering of 31,645,570 shares of its common stock at a price of $23.80 per share, with the offering expected to close on January 20, 2026, subject to customary closing conditions [1][2]. Group 1: Offering Details - The underwriter has an option to purchase an additional 4,746,835 shares at the public offering price, less underwriting discounts and commissions [2]. - The net proceeds from the offering will be used for general corporate purposes, which may include funding future acquisitions [2]. - BofA Securities is acting as the sole underwriter for the offering [2]. Group 2: Company Overview - QXO is the largest publicly traded distributor of roofing, waterproofing, and complementary building products in North America [5]. - The company aims to become the tech-enabled leader in the $800 billion building products distribution industry and targets $50 billion in annual revenues within the next decade through accretive acquisitions and organic growth [5]. Group 3: Regulatory Information - The offering is being made by means of a prospectus supplement under QXO's effective registration statement on Form S-3ASR, as filed with the Securities and Exchange Commission (SEC) [3].

Acquisition Details - QXO completed the acquisition of Beacon Roofing Supply for $124.35 per share, finalizing the merger on April 29, 2025[2]. - The acquisition was accounted for using the acquisition method, with QXO identified as the accounting acquirer[22]. - QXO repaid all historical Beacon debt outstanding as part of the acquisition financing[19]. - The preliminary aggregate acquisition consideration for the acquisition was $10,644.0 million[49]. - Estimated fair value of goodwill from the acquisition is $5,068.9 million[49]. - The company recorded a write-off of $2.4 million related to loss on debt extinguishment as part of the acquisition[56]. Financing Activities - The company raised approximately $1.45 billion from public offerings of common stock and Mandatory Convertible Preferred Stock in May 2025[3]. - QXO issued $2.25 billion in Senior Secured Notes and entered a $2.25 billion senior secured term loan facility to finance the acquisition[17]. - The May 2025 Equity Financing included the sale of 48.5 million shares at $16.50 per share, generating $892.5 million in net proceeds[20]. - The company also raised $558.1 million from the issuance of 11.5 million depositary shares of Mandatory Convertible Preferred Stock[21]. - In June 2025, the company raised $1.96 billion in net proceeds from the sale of 89.9 million shares at $22.25 per share, with additional proceeds of $38.1 million from the partial exercise of an underwriter option[25]. - The proceeds from the June 2025 equity financing were used for general corporate purposes and not to pay down any debt related to the acquisition[26]. - On November 5, 2025, the company refinanced its Term Loan Facility, reducing the applicable margin for borrowings from 3.00% to 2.00% for Term SOFR borrowings and from 2.00% to 1.00% for base rate borrowings[27]. - The January 2026 Investment Agreement allows investors to purchase up to 300,000 shares of Series C Convertible Perpetual Preferred Stock for an aggregate price of $3.0 billion to fund one or more qualifying acquisitions[29]. - The company intends to use the net proceeds from the Convertible Preferred Investment for acquisitions with a purchase price exceeding $1.5 billion[30]. Financial Performance - For the year ended December 31, 2024, net sales were reported at $9,820.1 million, with a gross profit of $2,396.2 million[33]. - Total operating expenses for the same period were $2,385.7 million, resulting in an income from operations of $10.5 million[33]. - The net income attributable to common stockholders for the year ended December 31, 2024, was reported at a loss of $242.6 million[33]. - Basic net income per common share for the year was $(0.39)[33]. - Net sales reached $7,342.7 million, with QXO contributing $4,648.1 million and Beacon contributing $2,694.6 million[36]. - Gross profit totaled $1,839.3 million, with QXO's gross profit at $1,042.8 million and Beacon's at $664.8 million[36]. - Total operating expenses amounted to $1,999.6 million, with QXO's expenses at $1,218.5 million and Beacon's at $699.8 million[36]. - The net loss attributable to common stockholders was $377.0 million, with a basic and diluted loss per share of $0.46[36]. - The company incurred interest expense of $170.9 million, with a net interest income of $80.1 million[36]. - The provision for income taxes resulted in a benefit of $72.6 million, contributing to the overall net loss[36]. - The weighted-average common shares outstanding were 578.1 million for both basic and diluted calculations[36]. Pro Forma Adjustments - The unaudited pro forma combined financial information reflects operations from January 1, 2024, and includes Beacon's results post-acquisition[4]. - The pro forma adjustments are preliminary and subject to change based on final acquisition accounting[5]. - Pro forma adjustments were made based on management's estimates and assumptions for the acquisition accounting[42]. - Pro forma basic weighted average shares outstanding increased to 621.4 million for the year ended December 31, 2024[61]. - The statutory income tax rate used for pro forma adjustments is 26.0% for both the year ended December 31, 2024 and the nine months ended September 30, 2025[57]. - Pro forma amortization of intangible assets is estimated at $466.7 million for the year ended December 31, 2024[53]. - Adjustments to selling, general and administrative expenses (SG&A) resulted in a net pro forma adjustment of $55.7 million for the year ended December 31, 2024[54]. - Pro forma adjustment to cost of products sold includes $131.7 million for the estimated fair value of inventories recognized during the first year post-acquisition[50]. - The company made reclassifications to align QXO and Beacon's financial statement presentations, impacting interest expense and other income[44]. - The company anticipates a significant change in the effective tax rate post-merger due to various factors[57]. - The pro forma financing transaction accounting adjustments reflect new interest expenses associated with the acquisition financing totaling $356.1 million for the year ended December 31, 2024[55].

Group 1 - QXO, Inc. (NYSE:QXO) is recognized for supplying roofing, waterproofing, and building materials, including siding, insulation, and construction accessories [1] - Jim Cramer expressed confidence in QXO as a buy due to the leadership of Brad Jacobs, despite acknowledging a 10% short position in the stock [1] - Cramer noted that while he does not view the roofing business as particularly strong, he believes Jacobs will find ways to generate profit through consolidation and strategic moves [1] Group 2 - The article suggests that while QXO has investment potential, certain AI stocks may offer greater upside and lower downside risk [1]

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