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Reap Data Center Gains with These 3 Stocks: VRT, SMCI, ETN
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Artificial intelligence (AI) remains a hot market topic, with investors continuing to seek ways to obtain exposure. The theme has undoubtedly been one of the strongest we’ve seen in years, with many stocks benefiting, namely large-cap technology.
And for those seeking exposure, particularly concerning the data center angle, several stocks, including Vertiv (VRT - Free Report) , Super Micro Computer (SMCI - Free Report) , and Eaton (ETN - Free Report) , provide just that.
For those with an appetite for AI exposure through the data center angle, let’s take a closer look at each.
Vertiv Raises Outlook
Vertiv provides services for data centers, communication networks, and commercial and industrial facilities with a portfolio of power, cooling, and IT infrastructure solutions and services. The stock sports a favorable Zacks Rank #2 (Buy), with the revisions trend notably positive for its current fiscal year.
Image Source: Zacks Investment Research
Shares yield a modest 0.1% annually, undoubtedly on the lower end of the spectrum. Nonetheless, the company’s cash-generating abilities have seen a boost amid heightened demand, providing it the flexibility to potentially increase payouts in the future. Adjusted free cash flow of $101 million throughout its latest quarter jumped 300% year-over-year.
The company’s growth profile remains bright, underpinned by its Style Score of ‘A’ for Growth. Consensus expectations for its current fiscal year suggest 38% EPS growth on 13% higher sales, with next year's expectations suggesting an additional 30% earnings growth on a 12% sales bump.
Vertiv upped its current year sales outlook following its latest set of quarterly results, further confirming the robust demand being witnessed. Below is a chart illustrating the company’s sales on a quarterly basis.
Image Source: Zacks Investment Research
Super Micro Computer Posts Strong Sales Growth
Super Micro Computer is the premier provider of advanced Server Building Block Solutions for 5G/Edge, Data Center, Cloud, Enterprise, Big Data, HPC, and Embedded markets worldwide. The company’s earnings outlook remains bullish, helping the stock find its way back into a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Shares trade at an elevated 34.6X forward 12-month earnings multiple, reflective of investors’ high growth expectations. The company is expected to deliver just that, as Zacks Consensus estimates for its current fiscal year suggest 100% EPS growth on 11% higher sales.
SMCI’s sales growth has been remarkable, posting triple-digit percentage year-over-year growth rates in back-to-back releases.
Image Source: Zacks Investment Research
Shares have faced a bumpy road over the last three months, losing roughly 20% compared to a +5.9% gain from the S&P 500. The adverse price action likely reflects some profit-taking after an unbelievable run, with its current bullish earnings outlook set to provide the fuel needed to regain its mojo.
Image Source: Zacks Investment Research
Eaton Reports Quarterly Records
Eaton is an intelligent power management company that provides products for the data center, utility, industrial, commercial, machine building, residential, aerospace, and mobility markets. The stock sports a favorable Zacks Rank #2 (Buy), with its earnings outlook shifting positively across the board.
Image Source: Zacks Investment Research
Concerning its latest quarterly release, Eaton posted EPS of $2.40 and sales of $5.9 billion, which reflected Q1 records for the company. Notably, its twelve-month rolling average of orders in Q1 was up 8% organically, with highlighted strength in the data center market.
For those with an appetite for income, shares currently yield 1.2% annually, with the company’s 5.4% five-year annualized dividend growth rate also reflecting a shareholder-friendly nature. It’s worth noting that Eaton recently boosted its quarterly payout by 9% back in March of this year, and impressively, the company has paid a dividend on its shares every year since 1923.
Image Source: Zacks Investment Research
Bottom Line
The AI trade continues to grip investors, with many seeking exposure. It’s easy to understand why there’s such excitement surrounding the topic, as the technology is expected to boost productivity and provide meaningful operational efficiencies for businesses.
And for those interested in the data center angle, all three stocks above – Vertiv (VRT - Free Report) , Super Micro Computer (SMCI - Free Report) , and Eaton (ETN - Free Report) – deserve a watchlist spot.
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Reap Data Center Gains with These 3 Stocks: VRT, SMCI, ETN
Artificial intelligence (AI) remains a hot market topic, with investors continuing to seek ways to obtain exposure. The theme has undoubtedly been one of the strongest we’ve seen in years, with many stocks benefiting, namely large-cap technology.
And for those seeking exposure, particularly concerning the data center angle, several stocks, including Vertiv (VRT - Free Report) , Super Micro Computer (SMCI - Free Report) , and Eaton (ETN - Free Report) , provide just that.
For those with an appetite for AI exposure through the data center angle, let’s take a closer look at each.
Vertiv Raises Outlook
Vertiv provides services for data centers, communication networks, and commercial and industrial facilities with a portfolio of power, cooling, and IT infrastructure solutions and services. The stock sports a favorable Zacks Rank #2 (Buy), with the revisions trend notably positive for its current fiscal year.
Image Source: Zacks Investment Research
Shares yield a modest 0.1% annually, undoubtedly on the lower end of the spectrum. Nonetheless, the company’s cash-generating abilities have seen a boost amid heightened demand, providing it the flexibility to potentially increase payouts in the future. Adjusted free cash flow of $101 million throughout its latest quarter jumped 300% year-over-year.
The company’s growth profile remains bright, underpinned by its Style Score of ‘A’ for Growth. Consensus expectations for its current fiscal year suggest 38% EPS growth on 13% higher sales, with next year's expectations suggesting an additional 30% earnings growth on a 12% sales bump.
Vertiv upped its current year sales outlook following its latest set of quarterly results, further confirming the robust demand being witnessed. Below is a chart illustrating the company’s sales on a quarterly basis.
Image Source: Zacks Investment Research
Super Micro Computer Posts Strong Sales Growth
Super Micro Computer is the premier provider of advanced Server Building Block Solutions for 5G/Edge, Data Center, Cloud, Enterprise, Big Data, HPC, and Embedded markets worldwide. The company’s earnings outlook remains bullish, helping the stock find its way back into a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Shares trade at an elevated 34.6X forward 12-month earnings multiple, reflective of investors’ high growth expectations. The company is expected to deliver just that, as Zacks Consensus estimates for its current fiscal year suggest 100% EPS growth on 11% higher sales.
SMCI’s sales growth has been remarkable, posting triple-digit percentage year-over-year growth rates in back-to-back releases.
Image Source: Zacks Investment Research
Shares have faced a bumpy road over the last three months, losing roughly 20% compared to a +5.9% gain from the S&P 500. The adverse price action likely reflects some profit-taking after an unbelievable run, with its current bullish earnings outlook set to provide the fuel needed to regain its mojo.
Image Source: Zacks Investment Research
Eaton Reports Quarterly Records
Eaton is an intelligent power management company that provides products for the data center, utility, industrial, commercial, machine building, residential, aerospace, and mobility markets. The stock sports a favorable Zacks Rank #2 (Buy), with its earnings outlook shifting positively across the board.
Image Source: Zacks Investment Research
Concerning its latest quarterly release, Eaton posted EPS of $2.40 and sales of $5.9 billion, which reflected Q1 records for the company. Notably, its twelve-month rolling average of orders in Q1 was up 8% organically, with highlighted strength in the data center market.
For those with an appetite for income, shares currently yield 1.2% annually, with the company’s 5.4% five-year annualized dividend growth rate also reflecting a shareholder-friendly nature. It’s worth noting that Eaton recently boosted its quarterly payout by 9% back in March of this year, and impressively, the company has paid a dividend on its shares every year since 1923.
Image Source: Zacks Investment Research
Bottom Line
The AI trade continues to grip investors, with many seeking exposure. It’s easy to understand why there’s such excitement surrounding the topic, as the technology is expected to boost productivity and provide meaningful operational efficiencies for businesses.
And for those interested in the data center angle, all three stocks above – Vertiv (VRT - Free Report) , Super Micro Computer (SMCI - Free Report) , and Eaton (ETN - Free Report) – deserve a watchlist spot.