QXO Stock Pulled Back in March. Is It Time to Buy?
Key Points
No new acquisitions were announced in March.
Brad Jacobs has shown he won't overpay.
Another deal could drive QXO shares back to recent highs.
QXO (NYSE: QXO) CEO Brad Jacobs has been very transparent with investors about his goals. Jacobs started QXO explicitly to consolidate a fragmented $800 billion building products distribution industry. He aims to reach $50 billion in annual revenue over the next ten years by pursuing strategic acquisitions and fostering organic growth.
The stock has proceeded in fits and starts as QXO has announced its first steps down that path. There were no new acquisition announcements last month, which presumably contributed to the stock price pullback.
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QXO shares plunged 18.9% in March, according to data provided by S&P Global Market Intelligence.
Image source: The Motley Fool.
From zero to $7 billion
Jacobs and his team are off to a strong start on their growth path. Thanks to its first big acquisition, revenue soared to $6.8 billion last year from just $57 million in 2024. QXO completed its acquisition of Beacon Roofing Supply about a year ago to bring those sales onto its books. QXO plans to use its technologies to accelerate growth and increase margins at Beacon.
Earlier this year, QXO announced it would also be buying national building products distributor Kodiak Building Partners. QXO stock soared as the company said that the acquisition would be "highly accretive" to 2026 earnings. That announcement helped drive the stock to a recent high of $27 per share.
The stock is now 32.5% off that peak.
No news isn't good news
That's likely because no new announcements came in March. The QXO stock thesis relies on a lengthy line of acquisitions. While no news isn't good news, it isn't bad news either. That means the plunge in shares last month offers investors a window to buy QXO stock.
Another catalyst to push the stock higher is likely on the way. That could be the company's next acquisition target, or it could be a sign that the housing sector is recovering. Headwinds preventing that recovery include a lack of supply and tariffs that are increasing the costs of home ownership.
Proven track record
Investors should see the positive side of no new deals, too. Jacobs has shown that he isn't willing to overpay just to expand. An offer for building materials company GMS could have turned into a bidding war when Home Depot countered the QXO bid. Instead, Jacobs let Home Depot's subsidiary, SRS Distribution, acquire GMS for about $110 per share.
QXO offered about $95 per share and wasn't willing to increase it. That's great news for existing shareholders. Jacobs has a long history of successful business ventures, including GXO Logistics and United Rentals.
While investors must trust that Jacobs and his team will find new, profitable acquisitions to grow, the plan to do so is clear. The March pullback in QXO shares provides those who believe the company will succeed in finding more businesses to target a good opportunity to add the stock to a portfolio.
Howard Smith has positions in Home Depot and QXO. The Motley Fool has positions in and recommends Home Depot and QXO. The Motley Fool recommends GXO Logistics. The Motley Fool has a disclosure policy.