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Core & Main, Inc. (NYSE:CNM): Better Days in the Pipeline

We came across a bullish thesis on Core & Main, Inc. (NYSE:CNM) on ValueInvestorsClub by yellow. In this article, we will summarize the bulls’ thesis on CNM. The company’s shares were trading at $48.00 when this thesis was published, vs. the closing price of $52.53 on Apr 25.

A pipeline of natural gas cutting through a rural landscape.

CNM distributes water, wastewater, storm drainage, and fire protection products and related services in the United States. It has a 20% market share in the US in a highly fragmented industry where 60% is covered by independents.

While pipes account for most of the sales, gross margins can be as low as 5%. The profits are largely driven by specialized products that offer a gross margin 5x more than pipes. This is the reason why a 10% decline in PVC prices did not hurt CNM’s profitability from 2022 to 2024. To put numbers into perspective, a 50% decline in PVC pipe revenue would reduce gross profits by only ~3%. Therefore, worries about declining pipe revenue impacting the bottom line do not hold good.

2024 has been a year in which water infra projects had to be stalled due to bad weather. This led to the management reducing FY2024 guidance, leading to a 15% crash in stock price on the same day. These projects are not discretionary in nature and are expected to resume in 2025. The $50 billion allocation towards water infra projects in the Infrastructure and Investment Jobs Act is also unutilized due to bureaucratic delays. The funding should provide further tailwinds to CNM’s business in 2025.

High interest rates are also one of the reasons why project developers have not been keen on expediting funding. With rate cuts around the corner, one can expect more funding and better demand for products in water projects. This was hinted at the earnings call of Ferguson whose waterwork division is a direct competitor of CNM.

CNM should realize an EBITDA of $1 billion in 2025, rising to $1.5 billion in 2028. Using Ferguson’s EV multiple, the 2024-2028 EV comes to $15-23 billion, reflecting a share price of $60-100. Based on the current price, the potential upside is in the range of 14-90%.

While we acknowledge the potential of CNM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CNM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

A few years from now, you’ll wish you’d owned this stock.

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