CDW (CDW, Financial) returned to double-digit revenue (+10.7%) along with terrific earnings growth (+28.4%) as customers, particularly in the education and government verticals, get caught up from delayed IT spending as COVID-19 interruptions subsided in the December quarter. CDW finished the year with positive top-line growth and managed to expand margins as the Company was a critical supplier of "work-from-home" IT hardware and software solutions to small- and medium- sized businesses. The Company tends to outgrow IT spending budgets given they consistently take share from smaller distributors, while software and hardware vendors rely on CDW to generate bookings in the fragmented SMB customer channel. CDW's tech-enabling value proposition should continue to drive reliable double-digit earnings growth, meanwhile the stock has an undemanding multiple which is why we continue to hold it as overweight in the portfolio.
From David Rolfe (Trades, Portfolio)'s Wedgewood Funds first-quarter 2021 shareholder letter.
