TheValueist
Discretionary Long/Short Investor, TMT/Energy, Convexity & Factor Awareness
Powell Industries' $1.6B backlog and new data center orders should keep a good bid under the stock. Its chart is one of the few near-perfect setups in this market, and IBD named it Stock of the Day. x.comÂ
Penguin Solutions' cash-flow problems should resolve as operating cash flow doubles in FY27 and rises sharply in FY28. Operating income should double in 2027, though contracts and rack shipments are hard to model. Bullish into the midterms, not later amid high rates, turning credit and valuation. FY27 earnings justify $100; $150 by 2028 assumes no macro headwinds. A new facility could need $30-50M in power upgrades, and strong CXL demand could swell inventory. x.com x.com x.com x.comÂ
Powell Industries is a quality grid business priced too richly at 57x trailing earnings after a 175% gain this year. Its custom medium-voltage switchgear for data centers comes from few qualified vendors; orders nearly doubled to $490M, backlog is $1.8B, it won a record $400M+ data center contract, and gross margins rose from 16% to nearly 30%. But the valuation needs it to become a capacity-constrained AI power platform, and if AI capex slows in 2027, the multiple compresses first. x.comÂ
Powell Industries is the source-agnostic way to play AI power demand, because its custom heavy-duty switchgear is needed whatever generates the power and protects multi-million-dollar clusters from power surges. Per Bloomberg, AI-chip electricity demand could jump more than 1,100% by 2033, with the US taking 64%. Powell's $2.4B backlog, with visibility into 2028, shows data-center operators locking in gear early to avoid grid delays. x.com x.comÂ
Vertiv should beat and keep raising 2026 guidance because AI data center demand still exceeds supply. The proprietary pipeline added 50+ GW in 1Q26, 415 GW in the US since January 2023. Even flat orders near $18 billion would lift backlog from $15 billion to about $18 billion, implying about $25 billion of 2027 sales versus the Street's $16.9 billion. Base EPS of $6.75/$9.50 for 2026/27 tops the Street at a PEG under 1x. Margins are the watch item; the big run makes the print less attractive. … Show more