4. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Investors: 85
Jim Cramer has been recommending Vertiv Holdings Co (NYSE:VRT) over the past several months because of its data center business-related growth catalysts. In a latest program, Cramer recommended investors to buy more Vertiv shares.
“Buy more Vertiv…I think the stock’s terrific,” Cramer said.
Vertiv Holdings Co (NYSE:VRT) shares are already up 100% so far this year. The stock jumped in April after Vertiv Holdings Co (NYSE:VRT) increased its guidance, citing AI-related data center growth. For the full-year 2024, Vertiv Holdings Co (NYSE:VRT) expects its revenue to come in the range of $7.54 billion and $7.69 billion, compared to the previous estimate of $7.52 billion to $7.66 billion.
Vertiv Holdings Co (NYSE:VRT) is a market leader in the data center power and cooling market, which has nowhere to go but up from here since companies are hungry for data center solutions as they begin to deploy AI software. During the first quarter the company saw a 60% increase in organic orders. For full-year, the company plans to increase its CapEx to $200 million, which is high, but still in the company’s CapEX margin range between 2.5% to 3%. Vertiv also upped its revenue guidance. Here’s what the management said during the latest earnings call:
“We are expecting organic sales growth of approximately 12% with Americas up mid-teens, APAC high single digits and EMEA low double digits. We anticipate an $18 million year-over-year foreign exchange headwind in the second quarter as the U.S. dollar has strengthened against most foreign currencies over the last several months. We expect second quarter adjusted operating profit between $315 million and $335 million and adjusted operating margin of 16.9%, up 240 basis points at the midpoint with expected benefits from price/cost partially offset by continued growth investments.
Based upon a favorable start to the year and visibility into a strong sales pipeline for the rest of the year, we are increasing estimates for organic sales growth from 10% at the midpoint to approximately 12% with higher expectations across all 3 regions. In addition, we are increasing the midpoint of adjusted operating profit guidance from $1.3 billion in our prior guidance to $1.35 billion primarily driven by contribution margin on incremental sales. And as a result, we are increasing midpoint guidance for adjusted operating margin to 17.7% with the primary driver there being fixed cost leverage.”
Vertiv Holdings Co (NYSE:VRT) earnings are expected to grow 35% this year, while the Wall Street expects a 28% growth next year. Based on these growth estimates, Vertiv’s forward P/E ratio of 37.45 looks attractive.
Carillon Eagle Mid Cap Growth Fund stated the following regarding Vertiv Holdings Co (NYSE:VRT) in its first quarter 2024 investor letter:
“Vertiv Holdings Co (NYSE:VRT) is a global leader in the design, manufacturing and servicing of critical infrastructure for data centers and communication networks. The company is well-positioned to benefit from the acceleration in data center spending, which is being driven by the rapid growth in high-performance computing and artificial intelligence. This backdrop is resulting in both new and retrofitted data centers that require significantly more power and cooling content. Vertiv has leading positions in data center power and thermal management, as well as key relationships with both the largest semiconductor companies providing the next-generation chip technology and the hyperscaler companies that are at the forefront of deploying artificial intelligence.”