1. Quanta Services, Inc. (NYSE:PWR)
Number of Hedge Fund Holders: 56
Topping Peconic Hedge Fund’s top 10 stock picks is Quanta Services, Inc. (NYSE:PWR). Quanta Services, Inc. (NYSE:PWR) works in the energy and telecommunications sectors, which are seeing high demand due to investments in renewable energy, infrastructure upgrades, and expanding networks. Quanta Services Inc. (NYSE: PWR) has recently acquired Cupertino Electric for around $1.54 billion. This includes $1.3 billion in cash and 883,000 Quanta shares worth about $225 million, with an additional potential payment of up to $200 million based on performance targets. The acquisition is expected to immediately enhance Quanta Services, Inc. (NYSE:PWR)’s growth, cash flow, and earnings per share, contributing an estimated $175-$195 million to adjusted core profit and $0.40-$0.50 to adjusted diluted EPS for FY25.
Regulatory filings reveal that by the end of the first quarter of 2024, Peconic Partners owned 5,598,565 shares of Quanta Services, Inc. (NYSE:PWR), valued at $1,454,507,187, making up a significant portion of their portfolio at 64.58%. Guiding Mast Investments’ analyst, George Fisher, recommends buying Quanta Services, Inc. (NYSE:PWR) with a caveat. He notes that Quanta Services, Inc. (NYSE:PWR) has a high valuation, and its earnings per share (EPS) growth must sustain a 17% rate over the next few years.
Artisan Mid Cap Fund stated the following regarding Quanta Services, Inc. (NYSE:PWR) in its fourth quarter 2023 investor letter:
“Along with DexCom, Inc. (NASDAQ:DXCM), notable adds in the quarter included Quanta Services, Inc. (NYSE:PWR) and Jabil Inc. (NYSE:JBL). Quanta provides outsourced skilled labor for maintenance and construction services, primarily to utilities. We have followed the company for over a decade and have witnessed its shift from oil and gas to renewables. The energy transition (solar and wind farms, electric vehicles, etc.) requires investments in the US energy grid to support greater electrification. At the same time, climate change is increasing stress on the existing grid, forcing utilities to increase maintenance spending. Furthermore, Federal incentive programs, such as the Inflation Reduction Act and Bipartisan Infrastructure Act, will help fuel Quanta’s long-term growth given its expertise in transmission and distribution connections as renewable energy infrastructure seeks to connect to the grid. The stock sold off early in the quarter on concerns that higher interest rates would lead to a pullback in renewables investments by utility customers. However, based on our industry research, we think Quanta’s key customers are well resourced and committed to meeting long-term electrification needs via infrastructure investment. We used the selloff as an opportunity to move the position into the CropSM at a more attractive valuation.”
While we recognize Quanta Services, Inc. (NYSE:PWR)’s growth potential, and being the top choice of Peconic Hedge Fund, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
