We recently published a list of 10 Best Upside Stocks To Buy Right Now. In this article, we are going to take a look at where Vertiv Holdings Co. (NYSE:VRT) stands against other best upside stocks to buy right now.
On March 8, Bob Elliott, Co-Founder, CEO, and CIO of Unlimited, and Kara Murphy, CIO of Kestra Investment Management, joined ‘Closing Bell Overtime’ on CNBC to talk about the week’s market action. In a discussion on whether stocks or gold were the better choice in the current economic climate, Bob Elliott noted that stocks were facing tough circumstances due to elevated expectations at the start of the year, which had begun to adjust downward. He highlighted concerns about fiscal tightening, tariff volatility, and weaker employment conditions. However, he emphasized that these factors were overshadowed by potential tax policy changes, immigration restrictions, and efforts to curb federal spending, which could impact nominal GDP growth. Kara Murphy was asked about diversification, which is a topic that gained traction after a prolonged period where mega-caps and tech stocks dominated returns. She pointed out that diversification had been undervalued for two years but was now proving its worth as bonds and international funds outperformed US stocks. Murphy suggested that a diversified portfolio was essential for navigating the market, as it was no longer reliant on just a few high-performing stocks.
The conversation then turned to the push-and-pull between monetary and fiscal policies. Elliott discussed the volatility caused by rapid changes in policy, such as tariffs, which made it difficult for investors to have high conviction in any direction. This volatility was forcing professional money managers to reduce risk, which led to a decrease in long positions in leveraged investments and a reduction in short interest positions. Elliott highlighted the challenge of finding incremental buyers for risk assets in such an uncertain environment. Murphy reflected on the market’s valuation at the start of the year, and noted that while valuations were high, they alone were not a reliable timing indicator for market corrections. She emphasized that earnings momentum would be crucial in the second half of the year, with a potential shift in relative strength from the MAG7 stocks to other parts of the market. Murphy cautioned that high expectations meant companies needed to continue meeting those expectations to sustain market performance.
As the discussion underscored the complexities and uncertainties of the current market environment, it emphasized the importance of diversification in investment strategies.
Methodology
We first sifted through stock screeners, online rankings, and internet lists to compile a list of the best stocks with analysts’ upside potentials over 50%, as of March 10. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a group of technicians working on complex data center systems.
Vertiv Holdings Co. (NYSE:VRT)
Upside Potential as of March 10: 64.63%
Number of Hedge Fund Holders: 92
Vertiv Holdings Co. (NYSE:VRT) is a leader in critical digital infrastructure technologies. It provides essential power, thermal management, and IT solutions for data centers, communication networks, and industrial environments. It supports modern digital applications, from e-commerce and cloud computing to telecommunications and beyond.
The company is capitalizing on the need for power management in AI data centers. As a market leader, its expertise in AC and DC power conversion directly addresses the power distribution demands of AI. The company is actively investing in R&D and acquiring companies like BSE, which specifically strengthens its cooling capabilities for the high-performance requirements of AI deployments. The company’s EPS surged 77% year-over-year in Q4 2024, reaching $0.99. Looking ahead, it projects EPS between $3.5 and $3.6 for 2025.
Bank of America’s Andrew Obin reaffirmed a Buy rating on Vertiv Holdings Co. (NYSE:VRT) on January 21, citing its strong position in AI and data centers. He forecasts a 25% annual EPS growth from 2024 to 2027, despite general market concerns, believing that the company’s potential is undervalued due to both AI-related and traditional revenue growth, which is fueled by increased data center spending.
Baron Small Cap Fund is highly positive on Vertiv Holdings Co. (NYSE:VRT) because of its leading position in data center infrastructure and strong growth potential driven by AI. Here’s what it said in its Q4 2024 investor letter:
“Vertiv Holdings Co (NYSE:VRT), a critical digital infrastructure solutions provider for data centers, continued to perform well. With a leading market share in power and cooling applications for data centers, Vertiv is seen as a prime beneficiary of the AI-related data center buildout. At its November Analyst Day, Vertiv raised organic sales guidance to 12% to 14% CAGR for the next five years and gave guidance of 16% to 18% organic revenue growth for 2025. Vertiv also increased its target adjusted operating profit margin from 20% to 25%. While impressive on their own, these forecasts can prove conservative we think. With the stock up 141% in 2024, we have been trimming the stock into strength to manage position size but hold a large stake as we believe in its growth and that the stock is reasonably valued even after great appreciation the last two years.”
Overall, VRT ranks 5th on our list of best upside stocks to buy right now. While we acknowledge the growth potential of VRT as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
