We recently published a list titled Jim Cramer is Recommending These 10 Stocks in June. Since Vertiv Holdings Co (NYSE:VRT) ranks 4th in the list, it deserves a deeper look.
Jim Cramer in a latest program talked about the effect of inflation on US consumers and discussed how it’s impacting the Haves and the Have Nots. Cramer said while everyone is feeling the “pinch of inflation,” the Have Nots are feeling a “heck of a lot more” than the Haves. Cramer said that the difference between these two classes of consumers is very important for investment portfolios. He complained that many retailers don’t even know their consumers and that’s why they have a totally different reading of the current economic situation and its effects on consumers. Cramer criticized those who aren’t careful about the differences between consumers and use “the consumer” as a blanket term.
Cramer talked about several retail companies and how they are directly feeling the effects of inflation as consumers cut back on spending. The CNBC host said that Americans are making tough choices because of rising prices but we usually don’t talk about it.
Jim Cramer said that many strategists demand several rate cuts because “they want stocks higher.”
“I want higher stock prices too but if we get multiple rate cuts and inflation comes roaring back, it’s the Have Nots that will get hurt.”
Jay Powell Is Worried About Tens of Millions of People With Almost Nothing in the Bank, Cramer Says
Jim Cramer said that while many people won’t be happy to see a strong jobs report (because that decreases the chances of rate cuts), they should keep in mind the tough situation the Federal Reserve is in.
“Jay Powell isn’t worried about those of us with big portfolios. He’s worried about the tens of millions of people with almost nothing in the bank.”
For this article we watched several latest programs of Jim Cramer aired recently and picked 10 stocks he’s bullish about and recommending investors to buy or hold. With each stock we have mentioned the number of hedge fund investors. 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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.”
Overall, Vertiv Holdings Co (NYSE:VRT) ranks 4th on Insider Monkey’s list of Jim Cramer is Recommending These 10 Stocks in June. You can visit Jim Cramer is Recommending These 10 Stocks in June to see other stocks in the list. While we acknowledge the potential of Vertiv Holdings Co (NYSE:VRT), our conviction lies in the belief that smaller, under-the-radar 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 Vertiv Holdings Co (NYSE: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.
