We just covered Forget AI: Legendary Value Investor Seth Klarman Is Buying These 10 Value Stocks in 2026. DNOW Inc. (NYSE:DNOW) ranks #10 (see Seth Klarman Is Buying These 5 Value Stocks in 2026).
Baupost’s Stake: $43,174,000
DNOW Inc. (NYSE:DNOW) is a distributor of energy and industrial products, spun off from National Oilwell Varco in 2014. The stock is down about 9% over the past year.
Its merger with MRC Global has transformed the company into a $2.22 billion business with a diversified revenue mix across upstream energy (41%), midstream (21%), gas utilities (21%), and downstream and industrial (17%). The stock has taken a beating since the deal closed, weighed down by merger-related accounting charges and a messy Oracle ERP system conversion at legacy MRC Global. Bulls believe the selloff is an overreaction that creates a compelling entry point for long-term investors.
Key growth catalysts are building. Gas utilities are expanding capacity to meet rising energy demand, and the spike in oil prices following the Iran conflict could finally break three years of stagnant upstream spending.
DNOW Inc. is quietly becoming a data center play. The company supplies piping, valves, fittings, and fluid control infrastructure for data center cooling systems and power management. It grew its data center customer base from zero in 2024 to 11 customers by year-end 2025, and sees the segment as a meaningful growth avenue going forward.
The stock trades well below industrial distributor peers, where valuation multiples run 50–100% higher than current levels.
Rewey Asset Management stated the following regarding DNOW Inc. (NYSE:DNOW) in its Q1 2026 investor letter:
“We initiated a position in DNOW Inc. (NYSE:DNOW), a distributor of energy and industrial products. Spun off from National Oilwell Varco in 2014, DNOW has grown revenue and improved profitability over the past five years despite a weak upstream E&P environment. In November 2025, DNOW merged with its largest competitor, MRC Global, forming a $2.22 billion company with a diversified revenue mix: approximately 41% upstream energy, 21% midstream, 21% gas utilities, and 17% downstream and industrial.
We bought shares following the sharp sell-off after …..”(Click Here to Read the Letter in Detail).
While we acknowledge the risk and potential of DNOW 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 DNOW and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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